Correlation Between Ellington Financial and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Ellington Financial and Academy Sports 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 Financial and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Financial and Academy Sports Outdoors, you can compare the effects of market volatilities on Ellington Financial and Academy Sports 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 Financial with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Financial and Academy Sports.
Diversification Opportunities for Ellington Financial and Academy Sports
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ellington and Academy is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Financial and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors and Ellington Financial 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 Financial are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of Ellington Financial i.e., Ellington Financial and Academy Sports go up and down completely randomly.
Pair Corralation between Ellington Financial and Academy Sports
Assuming the 90 days trading horizon Ellington Financial is expected to generate 0.12 times more return on investment than Academy Sports. However, Ellington Financial is 8.47 times less risky than Academy Sports. It trades about 0.15 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.02 per unit of risk. If you would invest 2,423 in Ellington Financial on September 5, 2024 and sell it today you would earn a total of 126.00 from holding Ellington Financial or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ellington Financial vs. Academy Sports Outdoors
Performance |
| Timeline |
| Ellington Financial |
| Academy Sports Outdoors |
Ellington Financial and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Financial and Academy Sports
The main advantage of trading using opposite Ellington Financial and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Financial position performs unexpectedly, Academy Sports 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 Academy Sports will offset losses from the drop in Academy Sports' long position.| Ellington Financial vs. Summit Materials | Ellington Financial vs. Eldorado Gold Corp | Ellington Financial vs. Amkor Technology | Ellington Financial vs. Teleflex Incorporated |
| Academy Sports vs. Alcon AG | Academy Sports vs. The Cooper Companies, | Academy Sports vs. AngioDynamics | Academy Sports vs. AptarGroup |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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