Correlation Between Rithm Capital and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both Rithm Capital 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 Rithm Capital and Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rithm Capital Corp and Ellington Financial, you can compare the effects of market volatilities on Rithm Capital 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 Rithm Capital with a short position of Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and Ellington Financial.
Diversification Opportunities for Rithm Capital and Ellington Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rithm and Ellington is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial and Rithm Capital 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 Rithm Capital Corp 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 Rithm Capital i.e., Rithm Capital and Ellington Financial go up and down completely randomly.
Pair Corralation between Rithm Capital and Ellington Financial
Given the investment horizon of 90 days Rithm Capital Corp is expected to generate 0.81 times more return on investment than Ellington Financial. However, Rithm Capital Corp is 1.23 times less risky than Ellington Financial. It trades about 0.46 of its potential returns per unit of risk. Ellington Financial is currently generating about 0.23 per unit of risk. If you would invest 1,048 in Rithm Capital Corp on September 2, 2024 and sell it today you would earn a total of 77.00 from holding Rithm Capital Corp or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rithm Capital Corp vs. Ellington Financial
Performance |
| Timeline |
| Rithm Capital Corp |
| Ellington Financial |
Rithm Capital and Ellington Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rithm Capital and Ellington Financial
The main advantage of trading using opposite Rithm Capital and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital 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.| Rithm Capital vs. Starwood Property Trust | Rithm Capital vs. AGNC Investment Corp | Rithm Capital vs. Blackstone Mortgage Trust | Rithm Capital vs. Ares Commercial Real |
| Ellington Financial vs. Ellington Residential Mortgage | Ellington Financial vs. Orchid Island Capital | Ellington Financial vs. ARMOUR Residential REIT | Ellington Financial vs. Dynex 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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