Correlation Between Arlington Asset and Ellington Residential
Can any of the company-specific risk be diversified away by investing in both Arlington Asset and Ellington Residential 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 Arlington Asset and Ellington Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arlington Asset Investment and Ellington Residential Mortgage, you can compare the effects of market volatilities on Arlington Asset and Ellington Residential 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 Arlington Asset with a short position of Ellington Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arlington Asset and Ellington Residential.
Diversification Opportunities for Arlington Asset and Ellington Residential
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arlington and Ellington is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Arlington Asset Investment and Ellington Residential Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Residential and Arlington Asset 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 Arlington Asset Investment are associated (or correlated) with Ellington Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellington Residential has no effect on the direction of Arlington Asset i.e., Arlington Asset and Ellington Residential go up and down completely randomly.
Pair Corralation between Arlington Asset and Ellington Residential
If you would invest 469.00 in Arlington Asset Investment on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Arlington Asset Investment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Arlington Asset Investment vs. Ellington Residential Mortgage
Performance |
| Timeline |
| Arlington Asset Inve |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ellington Residential |
Arlington Asset and Ellington Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arlington Asset and Ellington Residential
The main advantage of trading using opposite Arlington Asset and Ellington Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arlington Asset position performs unexpectedly, Ellington Residential 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 Ellington Residential will offset losses from the drop in Ellington Residential's long position.| Arlington Asset vs. ACRES Commercial Realty | Arlington Asset vs. ACRES Commercial Realty | Arlington Asset vs. Cherry Hill Mortgage | Arlington Asset vs. Nexpoint Real Estate |
| Ellington Residential vs. Dynex Capital | Ellington Residential vs. Orchid Island Capital | Ellington Residential vs. ARMOUR Residential REIT | Ellington Residential vs. Ready Capital Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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