Correlation Between Rithm Property and Four Corners

Can any of the company-specific risk be diversified away by investing in both Rithm Property and Four Corners at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rithm Property and Four Corners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rithm Property Trust and Four Corners Property, you can compare the effects of market volatilities on Rithm Property and Four Corners and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rithm Property with a short position of Four Corners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Property and Four Corners.

Diversification Opportunities for Rithm Property and Four Corners

0.49

Correlation Coefficient

Rithm Property  Four Corners

Very weak diversification

The 3 months correlation between Rithm and Four is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Property Trust and Four Corners Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Corners Property and Rithm Property is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rithm Property Trust are associated (or correlated) with Four Corners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Corners Property has no effect on the direction of Rithm Property i.e., Rithm Property and Four Corners go up and down completely randomly.

Pair Corralation between Rithm Property and Four Corners

Considering the 90-day investment horizon Rithm Property Trust is expected to generate 2.16 times more return on investment than Four Corners. However, Rithm Property is 2.16 times more volatile than Four Corners Property. It trades about -0.07 of its potential returns per unit of risk. Four Corners Property is currently generating about -0.3 per unit of risk. If you would invest  302.00  in Rithm Property Trust on October 10, 2024 and sell it today you would lose (13.00) from holding Rithm Property Trust or give up 4.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Rithm Property Trust  vs.  Four Corners Property

Rithm Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rithm Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Four Corners Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Corners Property has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Four Corners is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rithm Property and Four Corners

The main advantage of trading using opposite Rithm Property and Four Corners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Property position performs unexpectedly, Four Corners can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Four Corners will offset losses from the drop in Four Corners' long position.

The idea behind Rithm Property Trust and Four Corners Property pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.