Correlation Between Ellington Residential and Fortitude Gold
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and Fortitude Gold 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 Fortitude Gold 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 Fortitude Gold Corp, you can compare the effects of market volatilities on Ellington Residential and Fortitude Gold 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 Fortitude Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and Fortitude Gold.
Diversification Opportunities for Ellington Residential and Fortitude Gold
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ellington and Fortitude is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and Fortitude Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortitude Gold Corp 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 Fortitude Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortitude Gold Corp has no effect on the direction of Ellington Residential i.e., Ellington Residential and Fortitude Gold go up and down completely randomly.
Pair Corralation between Ellington Residential and Fortitude Gold
Given the investment horizon of 90 days Ellington Residential Mortgage is expected to under-perform the Fortitude Gold. But the stock apears to be less risky and, when comparing its historical volatility, Ellington Residential Mortgage is 1.25 times less risky than Fortitude Gold. The stock trades about -0.03 of its potential returns per unit of risk. The Fortitude Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 545.00 in Fortitude Gold Corp on August 25, 2024 and sell it today you would earn a total of 13.00 from holding Fortitude Gold Corp or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ellington Residential Mortgage vs. Fortitude Gold Corp
Performance |
| Timeline |
| Ellington Residential |
| Fortitude Gold Corp |
Ellington Residential and Fortitude Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and Fortitude Gold
The main advantage of trading using opposite Ellington Residential and Fortitude Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, Fortitude Gold 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 Fortitude Gold will offset losses from the drop in Fortitude Gold'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 |
| Fortitude Gold vs. Generationome Properties | Fortitude Gold vs. Gold Resource | Fortitude Gold vs. PermRock Royalty Trust | Fortitude Gold vs. Ellington Residential Mortgage |
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.
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