Correlation Between Morgan Stanley and Ellington Residential
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Ellington Residential 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 Morgan Stanley and Ellington Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Ellington Residential Mortgage, you can compare the effects of market volatilities on Morgan Stanley and Ellington Residential 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 Morgan Stanley with a short position of Ellington Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Ellington Residential.
Diversification Opportunities for Morgan Stanley and Ellington Residential
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and Ellington is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and Ellington Residential Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Residential and Morgan Stanley 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 Morgan Stanley are associated (or correlated) with Ellington Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellington Residential has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Ellington Residential go up and down completely randomly.
Pair Corralation between Morgan Stanley and Ellington Residential
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 1.83 times more return on investment than Ellington Residential. However, Morgan Stanley is 1.83 times more volatile than Ellington Residential Mortgage. It trades about 0.24 of its potential returns per unit of risk. Ellington Residential Mortgage is currently generating about -0.11 per unit of risk. If you would invest 11,735 in Morgan Stanley on August 24, 2024 and sell it today you would earn a total of 1,764 from holding Morgan Stanley or generate 15.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Ellington Residential Mortgage
Performance |
| Timeline |
| Morgan Stanley |
| Ellington Residential |
Morgan Stanley and Ellington Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Ellington Residential
The main advantage of trading using opposite Morgan Stanley and Ellington Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Ellington Residential 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 Ellington Residential will offset losses from the drop in Ellington Residential's long position.| Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Riot Blockchain | Morgan Stanley vs. Marathon Digital Holdings | Morgan Stanley vs. Applied Blockchain |
| Ellington Residential vs. Dynex Capital | Ellington Residential vs. Orchid Island Capital | Ellington Residential vs. ARMOUR Residential REIT | Ellington Residential vs. Ready Capital Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Stocks Directory Find actively traded stocks across global markets |