Correlation Between Ellington Residential and Nexpoint Real
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and Nexpoint Real 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 Nexpoint Real 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 Nexpoint Real Estate, you can compare the effects of market volatilities on Ellington Residential and Nexpoint Real 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 Nexpoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and Nexpoint Real.
Diversification Opportunities for Ellington Residential and Nexpoint Real
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ellington and Nexpoint is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and Nexpoint Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Real Estate 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 Nexpoint Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Real Estate has no effect on the direction of Ellington Residential i.e., Ellington Residential and Nexpoint Real go up and down completely randomly.
Pair Corralation between Ellington Residential and Nexpoint Real
Given the investment horizon of 90 days Ellington Residential Mortgage is expected to under-perform the Nexpoint Real. But the stock apears to be less risky and, when comparing its historical volatility, Ellington Residential Mortgage is 1.58 times less risky than Nexpoint Real. The stock trades about -0.12 of its potential returns per unit of risk. The Nexpoint Real Estate is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,583 in Nexpoint Real Estate on November 4, 2024 and sell it today you would lose (42.00) from holding Nexpoint Real Estate or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Residential Mortgage vs. Nexpoint Real Estate
Performance |
| Timeline |
| Ellington Residential |
| Nexpoint Real Estate |
Ellington Residential and Nexpoint Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and Nexpoint Real
The main advantage of trading using opposite Ellington Residential and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, Nexpoint Real 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 Nexpoint Real will offset losses from the drop in Nexpoint Real'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 |
| Nexpoint Real vs. Ellington Residential Mortgage | Nexpoint Real vs. Ares Commercial Real | Nexpoint Real vs. TPG RE Finance | Nexpoint Real vs. Ellington Financial |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |