Correlation Between Envela Corp and ELLINGTON FINL
Can any of the company-specific risk be diversified away by investing in both Envela Corp and ELLINGTON FINL 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 Envela Corp and ELLINGTON FINL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Envela Corp and ELLINGTON FINL INC, you can compare the effects of market volatilities on Envela Corp and ELLINGTON FINL 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 Envela Corp with a short position of ELLINGTON FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Envela Corp and ELLINGTON FINL.
Diversification Opportunities for Envela Corp and ELLINGTON FINL
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Envela and ELLINGTON is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Envela Corp and ELLINGTON FINL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELLINGTON FINL INC and Envela Corp 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 Envela Corp are associated (or correlated) with ELLINGTON FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELLINGTON FINL INC has no effect on the direction of Envela Corp i.e., Envela Corp and ELLINGTON FINL go up and down completely randomly.
Pair Corralation between Envela Corp and ELLINGTON FINL
Assuming the 90 days trading horizon Envela Corp is expected to generate 4.34 times more return on investment than ELLINGTON FINL. However, Envela Corp is 4.34 times more volatile than ELLINGTON FINL INC. It trades about 0.24 of its potential returns per unit of risk. ELLINGTON FINL INC is currently generating about -0.09 per unit of risk. If you would invest 595.00 in Envela Corp on September 23, 2024 and sell it today you would earn a total of 75.00 from holding Envela Corp or generate 12.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 77.27% |
Values | Daily Returns |
Envela Corp vs. ELLINGTON FINL INC
Performance |
Timeline |
Envela Corp |
ELLINGTON FINL INC |
Envela Corp and ELLINGTON FINL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Envela Corp and ELLINGTON FINL
The main advantage of trading using opposite Envela Corp and ELLINGTON FINL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envela Corp position performs unexpectedly, ELLINGTON FINL 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 FINL will offset losses from the drop in ELLINGTON FINL's long position.Envela Corp vs. Apple Inc | Envela Corp vs. Apple Inc | Envela Corp vs. Apple Inc | Envela Corp vs. Apple Inc |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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