Correlation Between Ellington Residential and Ecc Cap

Can any of the company-specific risk be diversified away by investing in both Ellington Residential and Ecc Cap 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 Ellington Residential and Ecc Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ellington Residential Mortgage and Ecc Cap Corp, you can compare the effects of market volatilities on Ellington Residential and Ecc Cap 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 Ellington Residential with a short position of Ecc Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and Ecc Cap.

Diversification Opportunities for Ellington Residential and Ecc Cap

0.33

Correlation Coefficient

Ellington Residential  Ecc Cap

Weak diversification

The 3 months correlation between Ellington and Ecc is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and Ecc Cap Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecc Cap Corp and Ellington Residential 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 Ellington Residential Mortgage are associated (or correlated) with Ecc Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecc Cap Corp has no effect on the direction of Ellington Residential i.e., Ellington Residential and Ecc Cap go up and down completely randomly.

Pair Corralation between Ellington Residential and Ecc Cap

If you would invest  665.00  in Ellington Residential Mortgage on September 3, 2024 and sell it today you would earn a total of  8.00  from holding Ellington Residential Mortgage or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Ellington Residential Mortgage  vs.  Ecc Cap Corp

Ellington Residential

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ellington Residential Mortgage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Ellington Residential is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Ecc Cap Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecc Cap Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ecc Cap is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ellington Residential and Ecc Cap

The main advantage of trading using opposite Ellington Residential and Ecc Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, Ecc Cap 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 Ecc Cap will offset losses from the drop in Ecc Cap's long position.

The idea behind Ellington Residential Mortgage and Ecc Cap Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.