Correlation Between Ready Capital and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both Ready Capital 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 Ready Capital and Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ready Capital and Ellington Financial, you can compare the effects of market volatilities on Ready Capital 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 Ready Capital with a short position of Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Ellington Financial.
Diversification Opportunities for Ready Capital and Ellington Financial
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ready and Ellington is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial and Ready Capital 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 Ready Capital 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 Ready Capital i.e., Ready Capital and Ellington Financial go up and down completely randomly.
Pair Corralation between Ready Capital and Ellington Financial
Assuming the 90 days horizon Ready Capital is expected to generate 2.91 times more return on investment than Ellington Financial. However, Ready Capital is 2.91 times more volatile than Ellington Financial. It trades about 0.03 of its potential returns per unit of risk. Ellington Financial is currently generating about 0.06 per unit of risk. If you would invest 1,563 in Ready Capital on September 26, 2024 and sell it today you would earn a total of 257.00 from holding Ready Capital or generate 16.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 92.89% |
Values | Daily Returns |
Ready Capital vs. Ellington Financial
Performance |
Timeline |
Ready Capital |
Ellington Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Ready Capital and Ellington Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ready Capital and Ellington Financial
The main advantage of trading using opposite Ready Capital and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital 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.Ready Capital vs. Ready Capital | Ready Capital vs. PennyMac Mortgage Investment | Ready Capital vs. MFA Financial | Ready Capital vs. Arbor Realty Trust |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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