Correlation Between ELLINGTON RESIDMTG and Blackstone Mortgage

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Can any of the company-specific risk be diversified away by investing in both ELLINGTON RESIDMTG and Blackstone Mortgage 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 RESIDMTG and Blackstone Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELLINGTON RESIDMTG SBI and Blackstone Mortgage Trust, you can compare the effects of market volatilities on ELLINGTON RESIDMTG and Blackstone Mortgage 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 RESIDMTG with a short position of Blackstone Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELLINGTON RESIDMTG and Blackstone Mortgage.

Diversification Opportunities for ELLINGTON RESIDMTG and Blackstone Mortgage

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between ELLINGTON and Blackstone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ELLINGTON RESIDMTG SBI and Blackstone Mortgage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Mortgage Trust and ELLINGTON RESIDMTG 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 RESIDMTG SBI are associated (or correlated) with Blackstone Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Mortgage Trust has no effect on the direction of ELLINGTON RESIDMTG i.e., ELLINGTON RESIDMTG and Blackstone Mortgage go up and down completely randomly.

Pair Corralation between ELLINGTON RESIDMTG and Blackstone Mortgage

Assuming the 90 days horizon ELLINGTON RESIDMTG SBI is expected to generate 1.04 times more return on investment than Blackstone Mortgage. However, ELLINGTON RESIDMTG is 1.04 times more volatile than Blackstone Mortgage Trust. It trades about 0.11 of its potential returns per unit of risk. Blackstone Mortgage Trust is currently generating about 0.04 per unit of risk. If you would invest  592.00  in ELLINGTON RESIDMTG SBI on October 25, 2024 and sell it today you would earn a total of  58.00  from holding ELLINGTON RESIDMTG SBI or generate 9.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ELLINGTON RESIDMTG SBI  vs.  Blackstone Mortgage Trust

 Performance 
       Timeline  
ELLINGTON RESIDMTG SBI 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ELLINGTON RESIDMTG SBI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ELLINGTON RESIDMTG may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Blackstone Mortgage Trust 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Mortgage Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Blackstone Mortgage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ELLINGTON RESIDMTG and Blackstone Mortgage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ELLINGTON RESIDMTG and Blackstone Mortgage

The main advantage of trading using opposite ELLINGTON RESIDMTG and Blackstone Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELLINGTON RESIDMTG position performs unexpectedly, Blackstone Mortgage 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 Blackstone Mortgage will offset losses from the drop in Blackstone Mortgage's long position.
The idea behind ELLINGTON RESIDMTG SBI and Blackstone Mortgage Trust 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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