Correlation Between Great Ajax and Ellington Residential
Can any of the company-specific risk be diversified away by investing in both Great Ajax 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 Great Ajax and Ellington Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Ajax Corp and Ellington Residential Mortgage, you can compare the effects of market volatilities on Great Ajax 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 Great Ajax with a short position of Ellington Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Ajax and Ellington Residential.
Diversification Opportunities for Great Ajax and Ellington Residential
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Ellington is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Great Ajax Corp and Ellington Residential Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Residential and Great Ajax 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 Great Ajax Corp 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 Great Ajax i.e., Great Ajax and Ellington Residential go up and down completely randomly.
Pair Corralation between Great Ajax and Ellington Residential
Considering the 90-day investment horizon Great Ajax Corp is expected to under-perform the Ellington Residential. But the stock apears to be less risky and, when comparing its historical volatility, Great Ajax Corp is 1.29 times less risky than Ellington Residential. The stock trades about -0.17 of its potential returns per unit of risk. The Ellington Residential Mortgage is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 671.00 in Ellington Residential Mortgage on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Ellington Residential Mortgage or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Ajax Corp vs. Ellington Residential Mortgage
Performance |
| Timeline |
| Great Ajax Corp |
| Ellington Residential |
Great Ajax and Ellington Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Ajax and Ellington Residential
The main advantage of trading using opposite Great Ajax and Ellington Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Ajax 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.| Great Ajax vs. Ellington Financial | Great Ajax vs. Dynex Capital | Great Ajax vs. Ares Commercial Real | Great Ajax vs. Cherry Hill Mortgage |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |