Correlation Between Rithm Capital and Ellington Residential
Can any of the company-specific risk be diversified away by investing in both Rithm Capital and Ellington Residential 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 Rithm Capital and Ellington Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rithm Capital Corp and Ellington Residential Mortgage, you can compare the effects of market volatilities on Rithm Capital and Ellington Residential 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 Rithm Capital with a short position of Ellington Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and Ellington Residential.
Diversification Opportunities for Rithm Capital and Ellington Residential
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rithm and Ellington is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and Ellington Residential Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Residential and Rithm 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 Rithm Capital Corp are associated (or correlated) with Ellington Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellington Residential has no effect on the direction of Rithm Capital i.e., Rithm Capital and Ellington Residential go up and down completely randomly.
Pair Corralation between Rithm Capital and Ellington Residential
Given the investment horizon of 90 days Rithm Capital Corp is expected to generate 1.08 times more return on investment than Ellington Residential. However, Rithm Capital is 1.08 times more volatile than Ellington Residential Mortgage. It trades about 0.1 of its potential returns per unit of risk. Ellington Residential Mortgage is currently generating about -0.11 per unit of risk. If you would invest 1,062 in Rithm Capital Corp on December 28, 2024 and sell it today you would earn a total of 77.00 from holding Rithm Capital Corp or generate 7.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Rithm Capital Corp vs. Ellington Residential Mortgage
Performance |
Timeline |
Rithm Capital Corp |
Ellington Residential |
Rithm Capital and Ellington Residential Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rithm Capital and Ellington Residential
The main advantage of trading using opposite Rithm Capital and Ellington Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital position performs unexpectedly, Ellington Residential 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 Residential will offset losses from the drop in Ellington Residential's long position.Rithm Capital vs. Starwood Property Trust | Rithm Capital vs. AGNC Investment Corp | Rithm Capital vs. Blackstone Mortgage Trust | Rithm Capital vs. Ares Commercial Real |
Ellington Residential vs. Dynex Capital | Ellington Residential vs. Orchid Island Capital | Ellington Residential vs. ARMOUR Residential REIT | Ellington Residential vs. Ready Capital Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |