Correlation Between Ellington Financial and Apollo Commercial
Can any of the company-specific risk be diversified away by investing in both Ellington Financial and Apollo Commercial 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 Apollo Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Financial and Apollo Commercial Real, you can compare the effects of market volatilities on Ellington Financial and Apollo Commercial 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 Apollo Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Financial and Apollo Commercial.
Diversification Opportunities for Ellington Financial and Apollo Commercial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ellington and Apollo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Financial and Apollo Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Commercial Real 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 Apollo Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Commercial Real has no effect on the direction of Ellington Financial i.e., Ellington Financial and Apollo Commercial go up and down completely randomly.
Pair Corralation between Ellington Financial and Apollo Commercial
Considering the 90-day investment horizon Ellington Financial is expected to generate 0.73 times more return on investment than Apollo Commercial. However, Ellington Financial is 1.36 times less risky than Apollo Commercial. It trades about 0.03 of its potential returns per unit of risk. Apollo Commercial Real is currently generating about 0.01 per unit of risk. If you would invest 1,027 in Ellington Financial on August 24, 2024 and sell it today you would earn a total of 213.00 from holding Ellington Financial or generate 20.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Financial vs. Apollo Commercial Real
Performance |
| Timeline |
| Ellington Financial |
| Apollo Commercial Real |
Ellington Financial and Apollo Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Financial and Apollo Commercial
The main advantage of trading using opposite Ellington Financial and Apollo Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Financial position performs unexpectedly, Apollo Commercial 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 Apollo Commercial will offset losses from the drop in Apollo Commercial's long position.| Ellington Financial vs. Ellington Residential Mortgage | Ellington Financial vs. Orchid Island Capital | Ellington Financial vs. ARMOUR Residential REIT | Ellington Financial vs. Dynex Capital |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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