Correlation Between QVCC and Ready Capital

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

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

Diversification Opportunities for QVCC and Ready Capital

-0.44

Correlation Coefficient

QVCC  Ready Capital

Very good diversification

The 3 months correlation between QVCC and Ready is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding QVCC and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and QVCC 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 QVCC 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 QVCC i.e., QVCC and Ready Capital go up and down completely randomly.

Pair Corralation between QVCC and Ready Capital

Given the investment horizon of 90 days QVCC is expected to generate 5.78 times more return on investment than Ready Capital. However, QVCC is 5.78 times more volatile than Ready Capital. It trades about 0.05 of its potential returns per unit of risk. Ready Capital is currently generating about 0.08 per unit of risk. If you would invest  927.00  in QVCC on September 14, 2024 and sell it today you would earn a total of  257.00  from holding QVCC or generate 27.72% return on investment over 90 days.

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

QVCC  vs.  Ready Capital

QVCC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QVCC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ready Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ready Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Ready Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with QVCC and Ready Capital

The main advantage of trading using opposite QVCC and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QVCC 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 QVCC 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.