Correlation Between Ellington Financial and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Ellington Financial and Rithm Capital 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 Rithm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Financial and Rithm Capital Corp, you can compare the effects of market volatilities on Ellington Financial and Rithm Capital 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 Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Financial and Rithm Capital.
Diversification Opportunities for Ellington Financial and Rithm Capital
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ellington and Rithm is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Financial and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp 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 Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of Ellington Financial i.e., Ellington Financial and Rithm Capital go up and down completely randomly.
Pair Corralation between Ellington Financial and Rithm Capital
Considering the 90-day investment horizon Ellington Financial is expected to generate 2.62 times less return on investment than Rithm Capital. In addition to that, Ellington Financial is 1.06 times more volatile than Rithm Capital Corp. It trades about 0.03 of its total potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.09 per unit of volatility. If you would invest 772.00 in Rithm Capital Corp on August 31, 2024 and sell it today you would earn a total of 353.00 from holding Rithm Capital Corp or generate 45.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Financial vs. Rithm Capital Corp
Performance |
| Timeline |
| Ellington Financial |
| Rithm Capital Corp |
Ellington Financial and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Financial and Rithm Capital
The main advantage of trading using opposite Ellington Financial and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Financial position performs unexpectedly, Rithm Capital 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 Rithm Capital will offset losses from the drop in Rithm Capital'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 |
| Rithm Capital vs. Ellington Financial | Rithm Capital vs. Dynex Capital | Rithm Capital vs. Orchid Island Capital | Rithm Capital vs. Invesco Mortgage Capital |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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