Correlation Between NexPoint Real and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both NexPoint Real and Ellington Financial 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 NexPoint Real and Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexPoint Real Estate and Ellington Financial, you can compare the effects of market volatilities on NexPoint Real and Ellington Financial 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 NexPoint Real with a short position of Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Real and Ellington Financial.
Diversification Opportunities for NexPoint Real and Ellington Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NexPoint and Ellington is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial and NexPoint Real 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 NexPoint Real Estate are associated (or correlated) with Ellington Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellington Financial has no effect on the direction of NexPoint Real i.e., NexPoint Real and Ellington Financial go up and down completely randomly.
Pair Corralation between NexPoint Real and Ellington Financial
Assuming the 90 days trading horizon NexPoint Real Estate is expected to under-perform the Ellington Financial. In addition to that, NexPoint Real is 10.34 times more volatile than Ellington Financial. It trades about 0.0 of its total potential returns per unit of risk. Ellington Financial is currently generating about 0.32 per unit of volatility. If you would invest 2,542 in Ellington Financial on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Ellington Financial or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Real Estate vs. Ellington Financial
Performance |
| Timeline |
| NexPoint Real Estate |
| Ellington Financial |
NexPoint Real and Ellington Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Real and Ellington Financial
The main advantage of trading using opposite NexPoint Real and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Real position performs unexpectedly, Ellington Financial 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 Financial will offset losses from the drop in Ellington Financial's long position.| NexPoint Real vs. ACRES Commercial Realty | NexPoint Real vs. Dynex Capital | NexPoint Real vs. PennyMac Mortgage Investment | NexPoint Real vs. AG Mortgage Investment |
| Ellington Financial vs. AG Mortgage Investment | Ellington Financial vs. AG Mortgage Investment | Ellington Financial vs. AG Mortgage Investment | Ellington Financial vs. NexPoint Real Estate |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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