Correlation Between Ellington Financial and TPG RE
Can any of the company-specific risk be diversified away by investing in both Ellington Financial and TPG RE 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 TPG RE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Financial and TPG RE Finance, you can compare the effects of market volatilities on Ellington Financial and TPG RE 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 TPG RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Financial and TPG RE.
Diversification Opportunities for Ellington Financial and TPG RE
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ellington and TPG is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Financial and TPG RE Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG RE Finance 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 TPG RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG RE Finance has no effect on the direction of Ellington Financial i.e., Ellington Financial and TPG RE go up and down completely randomly.
Pair Corralation between Ellington Financial and TPG RE
Considering the 90-day investment horizon Ellington Financial is expected to generate 8.53 times less return on investment than TPG RE. But when comparing it to its historical volatility, Ellington Financial is 1.58 times less risky than TPG RE. It trades about 0.04 of its potential returns per unit of risk. TPG RE Finance is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 838.00 in TPG RE Finance on August 27, 2024 and sell it today you would earn a total of 65.00 from holding TPG RE Finance or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Financial vs. TPG RE Finance
Performance |
| Timeline |
| Ellington Financial |
| TPG RE Finance |
Ellington Financial and TPG RE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Financial and TPG RE
The main advantage of trading using opposite Ellington Financial and TPG RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Financial position performs unexpectedly, TPG RE 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 TPG RE will offset losses from the drop in TPG RE'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 |
| TPG RE vs. Ellington Residential Mortgage | TPG RE vs. Ares Commercial Real | TPG RE vs. Nexpoint Real Estate | TPG RE vs. Ellington Financial |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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