Correlation Between Ready Capital and Acres Commercial

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

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

Diversification Opportunities for Ready Capital and Acres Commercial

0.0

Correlation Coefficient

Ready Capital  Acres Commercial

Pay attention - limited upside

The 3 months correlation between Ready and Acres is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Acres Commercial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acres Commercial Realty and Ready 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 Ready Capital Corp are associated (or correlated) with Acres Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acres Commercial Realty has no effect on the direction of Ready Capital i.e., Ready Capital and Acres Commercial go up and down completely randomly.

Pair Corralation between Ready Capital and Acres Commercial

Allowing for the 90-day total investment horizon Ready Capital is expected to generate 1.71 times less return on investment than Acres Commercial. In addition to that, Ready Capital is 1.03 times more volatile than Acres Commercial Realty. It trades about 0.23 of its total potential returns per unit of risk. Acres Commercial Realty is currently generating about 0.4 per unit of volatility. If you would invest  1,530  in Acres Commercial Realty on September 1, 2024 and sell it today you would earn a total of  207.00  from holding Acres Commercial Realty or generate 13.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ready Capital Corp  vs.  Acres Commercial Realty

Ready Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acres Commercial Realty

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acres Commercial Realty are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Acres Commercial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ready Capital and Acres Commercial

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

The idea behind Ready Capital Corp and Acres Commercial Realty 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.