Correlation Between Apollo Commercial and Ellington Residential
Can any of the company-specific risk be diversified away by investing in both Apollo Commercial 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 Apollo Commercial and Ellington Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Commercial Real and Ellington Residential Mortgage, you can compare the effects of market volatilities on Apollo Commercial 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 Apollo Commercial with a short position of Ellington Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Commercial and Ellington Residential.
Diversification Opportunities for Apollo Commercial and Ellington Residential
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apollo and Ellington is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real and Ellington Residential Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Residential and Apollo 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 Apollo Commercial Real 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 Apollo Commercial i.e., Apollo Commercial and Ellington Residential go up and down completely randomly.
Pair Corralation between Apollo Commercial and Ellington Residential
Considering the 90-day investment horizon Apollo Commercial Real is expected to generate 0.66 times more return on investment than Ellington Residential. However, Apollo Commercial Real is 1.53 times less risky than Ellington Residential. It trades about 0.2 of its potential returns per unit of risk. Ellington Residential Mortgage is currently generating about 0.03 per unit of risk. If you would invest 885.00 in Apollo Commercial Real on August 27, 2024 and sell it today you would earn a total of 39.00 from holding Apollo Commercial Real or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Commercial Real vs. Ellington Residential Mortgage
Performance |
| Timeline |
| Apollo Commercial Real |
| Ellington Residential |
Apollo Commercial and Ellington Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Commercial and Ellington Residential
The main advantage of trading using opposite Apollo Commercial and Ellington Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Commercial 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.| Apollo Commercial vs. Blackstone Mortgage Trust | Apollo Commercial vs. Omega Healthcare Investors | Apollo Commercial vs. Medical Properties Trust |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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