NCT has always had a wide trading band. Most ppl like the upside band, but hate the downside band. I guess the algos that trade NCT try to keep it that way to make money beyond the sub second level. NRZ is new so I don't think an algo has adopted it yet.
I could be way off base, but part of why nct is selling off steeply compared to nrz might be due to the recent secondary which was finalized at $4.95 or thereabouts. I know I sold a few nct shares when it spiked back up to $5.30 thinking the volatile fixed rate markets could easily drive nct back below $5 to roughly around where the secondary was. Perhaps we saw more people locking in some short term profits thinking the same thing?
It's the perception that NCT will have to refinance loans for their CDO's at a higher interest rate. It is my understanding that the lion's share of this debt is match funded, meaning the terms coincide for the funds they borrow and then loan to their customers, eliminating that risk. Here is what I found under "Investment Strategy" on their website:
"We often utilize match funding and term financing strategies to increase returns to shareholders and minimize exposure to refinancing and interest rate risks". I wish I could find something more specific, so if anyone knows this in detail feel free to let us know.