Correlation Between Rithm Property and Sachem Capital

Can any of the company-specific risk be diversified away by investing in both Rithm Property and Sachem Capital 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 Sachem Capital 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 Sachem Capital Corp, you can compare the effects of market volatilities on Rithm Property and Sachem Capital 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 Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Property and Sachem Capital.

Diversification Opportunities for Rithm Property and Sachem Capital

0.52

Correlation Coefficient

Rithm Property  Sachem Capital

Very weak diversification

The 3 months correlation between Rithm and Sachem is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Property Trust and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Rithm Property i.e., Rithm Property and Sachem Capital go up and down completely randomly.

Pair Corralation between Rithm Property and Sachem Capital

Considering the 90-day investment horizon Rithm Property Trust is expected to under-perform the Sachem Capital. In addition to that, Rithm Property is 1.78 times more volatile than Sachem Capital Corp. It trades about -0.04 of its total potential returns per unit of risk. Sachem Capital Corp is currently generating about 0.01 per unit of volatility. If you would invest  1,705  in Sachem Capital Corp on September 26, 2024 and sell it today you would earn a total of  39.00  from holding Sachem Capital Corp or generate 2.29% return on investment over 90 days.

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

Rithm Property Trust  vs.  Sachem Capital Corp

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sachem Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Rithm Property and Sachem Capital

The main advantage of trading using opposite Rithm Property and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Property position performs unexpectedly, Sachem Capital 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 Sachem Capital will offset losses from the drop in Sachem Capital's long position.

The idea behind Rithm Property Trust and Sachem Capital Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.