Correlation Between Ellington Residential and New York
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and New York 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 New York 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 New York Mortgage, you can compare the effects of market volatilities on Ellington Residential and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and New York.
Diversification Opportunities for Ellington Residential and New York
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ellington and New is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and New York Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Mortgage 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Mortgage has no effect on the direction of Ellington Residential i.e., Ellington Residential and New York go up and down completely randomly.
Pair Corralation between Ellington Residential and New York
Given the investment horizon of 90 days Ellington Residential Mortgage is expected to generate 0.57 times more return on investment than New York. However, Ellington Residential Mortgage is 1.74 times less risky than New York. It trades about 0.1 of its potential returns per unit of risk. New York Mortgage is currently generating about 0.02 per unit of risk. If you would invest 648.00 in Ellington Residential Mortgage on October 21, 2024 and sell it today you would earn a total of 14.00 from holding Ellington Residential Mortgage or generate 2.16% 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. New York Mortgage
Performance |
| Timeline |
| Ellington Residential |
| New York Mortgage |
Ellington Residential and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and New York
The main advantage of trading using opposite Ellington Residential and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, New York 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 New York will offset losses from the drop in New York'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 |
| New York vs. Two Harbors Investments | New York vs. ARMOUR Residential REIT | New York vs. Annaly Capital Management | New York vs. AGNC Investment 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |