Correlation Between Ellington Residential and Chicago Atlantic
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and Chicago Atlantic 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 Chicago Atlantic 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 Chicago Atlantic Real, you can compare the effects of market volatilities on Ellington Residential and Chicago Atlantic 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 Chicago Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and Chicago Atlantic.
Diversification Opportunities for Ellington Residential and Chicago Atlantic
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ellington and Chicago is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and Chicago Atlantic Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicago Atlantic Real 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 Chicago Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicago Atlantic Real has no effect on the direction of Ellington Residential i.e., Ellington Residential and Chicago Atlantic go up and down completely randomly.
Pair Corralation between Ellington Residential and Chicago Atlantic
Given the investment horizon of 90 days Ellington Residential is expected to generate 2.21 times less return on investment than Chicago Atlantic. In addition to that, Ellington Residential is 1.19 times more volatile than Chicago Atlantic Real. It trades about 0.02 of its total potential returns per unit of risk. Chicago Atlantic Real is currently generating about 0.05 per unit of volatility. If you would invest 1,172 in Chicago Atlantic Real on October 25, 2024 and sell it today you would earn a total of 361.00 from holding Chicago Atlantic Real or generate 30.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Residential Mortgage vs. Chicago Atlantic Real
Performance |
| Timeline |
| Ellington Residential |
| Chicago Atlantic Real |
Ellington Residential and Chicago Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and Chicago Atlantic
The main advantage of trading using opposite Ellington Residential and Chicago Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, Chicago Atlantic 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 Chicago Atlantic will offset losses from the drop in Chicago Atlantic'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 |
| Chicago Atlantic vs. KKR Real Estate | Chicago Atlantic vs. Ellington Residential Mortgage | Chicago Atlantic vs. Claros Mortgage Trust | Chicago Atlantic vs. Ares Commercial Real |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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