Correlation Between ELLINGTON FINL and OSB GROUP

Can any of the company-specific risk be diversified away by investing in both ELLINGTON FINL and OSB GROUP 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 FINL and OSB GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ELLINGTON FINL INC and OSB GROUP PLC, you can compare the effects of market volatilities on ELLINGTON FINL and OSB GROUP 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 FINL with a short position of OSB GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELLINGTON FINL and OSB GROUP.

Diversification Opportunities for ELLINGTON FINL and OSB GROUP

0.75

Correlation Coefficient

ELLINGTON FINL  OSB GROUP

Poor diversification

The 3 months correlation between ELLINGTON and OSB is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ELLINGTON FINL INC and OSB GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSB GROUP PLC and ELLINGTON FINL 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 FINL INC are associated (or correlated) with OSB GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSB GROUP PLC has no effect on the direction of ELLINGTON FINL i.e., ELLINGTON FINL and OSB GROUP go up and down completely randomly.

Pair Corralation between ELLINGTON FINL and OSB GROUP

Assuming the 90 days horizon ELLINGTON FINL INC is expected to under-perform the OSB GROUP. But the stock apears to be less risky and, when comparing its historical volatility, ELLINGTON FINL INC is 4.0 times less risky than OSB GROUP. The stock trades about -0.09 of its potential returns per unit of risk. The OSB GROUP PLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  472.00  in OSB GROUP PLC on September 23, 2024 and sell it today you would lose (6.00) from holding OSB GROUP PLC or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ELLINGTON FINL INC  vs.  OSB GROUP PLC

ELLINGTON FINL INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ELLINGTON FINL INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ELLINGTON FINL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

OSB GROUP PLC

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OSB GROUP PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, OSB GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ELLINGTON FINL and OSB GROUP

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

The idea behind ELLINGTON FINL INC and OSB GROUP PLC 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.