Correlation Between Tradeweb Markets and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both Tradeweb Markets 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 Tradeweb Markets and Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradeweb Markets and Ellington Financial, you can compare the effects of market volatilities on Tradeweb Markets 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 Tradeweb Markets with a short position of Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradeweb Markets and Ellington Financial.
Diversification Opportunities for Tradeweb Markets and Ellington Financial
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tradeweb and Ellington is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial and Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets i.e., Tradeweb Markets and Ellington Financial go up and down completely randomly.
Pair Corralation between Tradeweb Markets and Ellington Financial
Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 1.22 times more return on investment than Ellington Financial. However, Tradeweb Markets is 1.22 times more volatile than Ellington Financial. It trades about 0.06 of its potential returns per unit of risk. Ellington Financial is currently generating about -0.02 per unit of risk. If you would invest 13,313 in Tradeweb Markets on August 23, 2024 and sell it today you would earn a total of 194.00 from holding Tradeweb Markets or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tradeweb Markets vs. Ellington Financial
Performance |
| Timeline |
| Tradeweb Markets |
| Ellington Financial |
Tradeweb Markets and Ellington Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tradeweb Markets and Ellington Financial
The main advantage of trading using opposite Tradeweb Markets and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets 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.| Tradeweb Markets vs. Evercore Partners | Tradeweb Markets vs. SCOR PK | Tradeweb Markets vs. Aquagold International | Tradeweb Markets vs. Small Cap Core |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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