Correlation Between Sachem Capital and Ready Capital

Can any of the company-specific risk be diversified away by investing in both Sachem Capital and Ready 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 Sachem Capital and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sachem Capital Corp and Ready Capital, you can compare the effects of market volatilities on Sachem Capital and Ready 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 Sachem Capital with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and Ready Capital.

Diversification Opportunities for Sachem Capital and Ready Capital

0.68

Correlation Coefficient

Sachem Capital  Ready Capital

Poor diversification

The 3 months correlation between Sachem and Ready is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and Sachem Capital 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 Sachem Capital Corp are associated (or correlated) with Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital has no effect on the direction of Sachem Capital i.e., Sachem Capital and Ready Capital go up and down completely randomly.

Pair Corralation between Sachem Capital and Ready Capital

Assuming the 90 days trading horizon Sachem Capital is expected to generate 22.25 times less return on investment than Ready Capital. In addition to that, Sachem Capital is 1.91 times more volatile than Ready Capital. It trades about 0.0 of its total potential returns per unit of risk. Ready Capital is currently generating about 0.03 per unit of volatility. If you would invest  1,631  in Ready Capital on September 28, 2024 and sell it today you would earn a total of  199.00  from holding Ready Capital or generate 12.2% return on investment over 90 days.

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

Sachem Capital Corp  vs.  Ready Capital

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.

Ready Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ready Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ready Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sachem Capital and Ready Capital

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

The idea behind Sachem Capital Corp and Ready Capital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.