Correlation Between WisdomTree and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both WisdomTree 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 WisdomTree and Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree and Ellington Financial, you can compare the effects of market volatilities on WisdomTree 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 WisdomTree with a short position of Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and Ellington Financial.
Diversification Opportunities for WisdomTree and Ellington Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and Ellington is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial and WisdomTree 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 WisdomTree 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 WisdomTree i.e., WisdomTree and Ellington Financial go up and down completely randomly.
Pair Corralation between WisdomTree and Ellington Financial
Allowing for the 90-day total investment horizon WisdomTree is expected to generate 1.96 times more return on investment than Ellington Financial. However, WisdomTree is 1.96 times more volatile than Ellington Financial. It trades about 0.35 of its potential returns per unit of risk. Ellington Financial is currently generating about 0.06 per unit of risk. If you would invest 1,041 in WisdomTree on August 27, 2024 and sell it today you would earn a total of 159.00 from holding WisdomTree or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree vs. Ellington Financial
Performance |
| Timeline |
| WisdomTree |
| Ellington Financial |
WisdomTree and Ellington Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree and Ellington Financial
The main advantage of trading using opposite WisdomTree and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree 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.| WisdomTree vs. PowerUp Acquisition Corp | WisdomTree vs. Aurora Innovation | WisdomTree vs. HUMANA INC | WisdomTree vs. Aquagold International |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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