Correlation Between ACRES Commercial and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both ACRES Commercial and Ellington Financial 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 ACRES Commercial and Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACRES Commercial Realty and Ellington Financial, you can compare the effects of market volatilities on ACRES Commercial and Ellington Financial 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 ACRES Commercial with a short position of Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and Ellington Financial.
Diversification Opportunities for ACRES Commercial and Ellington Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ACRES and Ellington is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial and ACRES Commercial 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 ACRES Commercial Realty are associated (or correlated) with Ellington Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellington Financial has no effect on the direction of ACRES Commercial i.e., ACRES Commercial and Ellington Financial go up and down completely randomly.
Pair Corralation between ACRES Commercial and Ellington Financial
Assuming the 90 days trading horizon ACRES Commercial Realty is expected to generate 1.78 times more return on investment than Ellington Financial. However, ACRES Commercial is 1.78 times more volatile than Ellington Financial. It trades about 0.25 of its potential returns per unit of risk. Ellington Financial is currently generating about 0.32 per unit of risk. If you would invest 2,498 in ACRES Commercial Realty on September 12, 2024 and sell it today you would earn a total of 22.00 from holding ACRES Commercial Realty or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACRES Commercial Realty vs. Ellington Financial
Performance |
| Timeline |
| ACRES Commercial Realty |
| Ellington Financial |
ACRES Commercial and Ellington Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACRES Commercial and Ellington Financial
The main advantage of trading using opposite ACRES Commercial and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACRES Commercial position performs unexpectedly, Ellington Financial 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 Financial will offset losses from the drop in Ellington Financial's long position.| ACRES Commercial vs. ACRES Commercial Realty | ACRES Commercial vs. Chimera Investment | ACRES Commercial vs. Cherry Hill Mortgage | ACRES Commercial vs. Cherry Hill Mortgage |
| Ellington Financial vs. AG Mortgage Investment | Ellington Financial vs. AG Mortgage Investment | Ellington Financial vs. AG Mortgage Investment | Ellington Financial vs. NexPoint Real Estate |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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