Correlation Between Cherry Hill and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both Cherry Hill 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 Cherry Hill and Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cherry Hill Mortgage and Ellington Financial, you can compare the effects of market volatilities on Cherry Hill 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 Cherry Hill with a short position of Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and Ellington Financial.
Diversification Opportunities for Cherry Hill and Ellington Financial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cherry and Ellington is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial and Cherry Hill 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 Cherry Hill Mortgage 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 Cherry Hill i.e., Cherry Hill and Ellington Financial go up and down completely randomly.
Pair Corralation between Cherry Hill and Ellington Financial
Given the investment horizon of 90 days Cherry Hill Mortgage is expected to under-perform the Ellington Financial. In addition to that, Cherry Hill is 2.37 times more volatile than Ellington Financial. It trades about -0.52 of its total potential returns per unit of risk. Ellington Financial is currently generating about 0.06 per unit of volatility. If you would invest 1,238 in Ellington Financial on August 27, 2024 and sell it today you would earn a total of 14.00 from holding Ellington Financial or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cherry Hill Mortgage vs. Ellington Financial
Performance |
| Timeline |
| Cherry Hill Mortgage |
| Ellington Financial |
Cherry Hill and Ellington Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and Ellington Financial
The main advantage of trading using opposite Cherry Hill and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill 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.| Cherry Hill vs. Ellington Financial | Cherry Hill vs. Dynex Capital | Cherry Hill vs. Ares Commercial Real | Cherry Hill vs. Chimera Investment |
| Ellington Financial vs. Ellington Residential Mortgage | Ellington Financial vs. Orchid Island Capital | Ellington Financial vs. ARMOUR Residential REIT | Ellington Financial vs. Dynex Capital |
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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