Correlation Between Rithm Property and Choice Properties

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

Diversification Opportunities for Rithm Property and Choice Properties

0.63

Correlation Coefficient

Rithm Property  Choice Properties

Poor diversification

The 3 months correlation between Rithm and Choice is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Property Trust and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real 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 Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Rithm Property i.e., Rithm Property and Choice Properties go up and down completely randomly.

Pair Corralation between Rithm Property and Choice Properties

Considering the 90-day investment horizon Rithm Property Trust is expected to under-perform the Choice Properties. In addition to that, Rithm Property is 1.45 times more volatile than Choice Properties Real. It trades about -0.18 of its total potential returns per unit of risk. Choice Properties Real is currently generating about -0.14 per unit of volatility. If you would invest  1,071  in Choice Properties Real on September 14, 2024 and sell it today you would lose (103.00) from holding Choice Properties Real or give up 9.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.06%
Values	Daily Returns

Rithm Property Trust  vs.  Choice Properties Real

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Rithm Property and Choice Properties

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

The idea behind Rithm Property Trust and Choice Properties Real 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.