Correlation Between Ellington Residential and Douglas Elliman
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and Douglas Elliman 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 Ellington Residential and Douglas Elliman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Residential Mortgage and Douglas Elliman, you can compare the effects of market volatilities on Ellington Residential and Douglas Elliman 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 Ellington Residential with a short position of Douglas Elliman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and Douglas Elliman.
Diversification Opportunities for Ellington Residential and Douglas Elliman
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ellington and Douglas is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and Douglas Elliman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Elliman and Ellington Residential 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 Ellington Residential Mortgage are associated (or correlated) with Douglas Elliman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Elliman has no effect on the direction of Ellington Residential i.e., Ellington Residential and Douglas Elliman go up and down completely randomly.
Pair Corralation between Ellington Residential and Douglas Elliman
Given the investment horizon of 90 days Ellington Residential Mortgage is expected to under-perform the Douglas Elliman. But the stock apears to be less risky and, when comparing its historical volatility, Ellington Residential Mortgage is 3.89 times less risky than Douglas Elliman. The stock trades about -0.02 of its potential returns per unit of risk. The Douglas Elliman is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 179.00 in Douglas Elliman on November 18, 2024 and sell it today you would earn a total of 39.00 from holding Douglas Elliman or generate 21.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Residential Mortgage vs. Douglas Elliman
Performance |
| Timeline |
| Ellington Residential |
| Douglas Elliman |
Ellington Residential and Douglas Elliman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and Douglas Elliman
The main advantage of trading using opposite Ellington Residential and Douglas Elliman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, Douglas Elliman 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 Douglas Elliman will offset losses from the drop in Douglas Elliman's long position.| Ellington Residential vs. Dynex Capital | Ellington Residential vs. Orchid Island Capital | Ellington Residential vs. ARMOUR Residential REIT | Ellington Residential vs. Ready Capital Corp |
| Douglas Elliman vs. Frp Holdings Ord | Douglas Elliman vs. Marcus Millichap | Douglas Elliman vs. Transcontinental Realty Investors | Douglas Elliman vs. Fathom Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |