Correlation Between Rithm Capital and Sachem Capital
Can any of the company-specific risk be diversified away by investing in both Rithm Capital 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 Capital 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 Capital Corp and Sachem Capital Corp, you can compare the effects of market volatilities on Rithm Capital 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 Capital with a short position of Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and Sachem Capital.
Diversification Opportunities for Rithm Capital and Sachem Capital
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rithm and Sachem is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp 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 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 Rithm Capital Corp 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 Capital i.e., Rithm Capital and Sachem Capital go up and down completely randomly.
Pair Corralation between Rithm Capital and Sachem Capital
Assuming the 90 days trading horizon Rithm Capital Corp is expected to generate 0.12 times more return on investment than Sachem Capital. However, Rithm Capital Corp is 8.5 times less risky than Sachem Capital. It trades about 0.17 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about -0.17 per unit of risk. If you would invest 2,341 in Rithm Capital Corp on September 1, 2024 and sell it today you would earn a total of 95.00 from holding Rithm Capital Corp or generate 4.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Rithm Capital Corp vs. Sachem Capital Corp
Performance |
Timeline |
Rithm Capital Corp |
Sachem Capital Corp |
Rithm Capital and Sachem Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rithm Capital and Sachem Capital
The main advantage of trading using opposite Rithm Capital and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital 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.Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage Investment |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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