Correlation Between Ellington Residential and MCGA
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and MCGA 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 Residential and MCGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Residential Mortgage and MCGA, you can compare the effects of market volatilities on Ellington Residential and MCGA 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 Residential with a short position of MCGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and MCGA.
Diversification Opportunities for Ellington Residential and MCGA
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ellington and MCGA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and MCGA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCGA and Ellington Residential 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 Residential Mortgage are associated (or correlated) with MCGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCGA has no effect on the direction of Ellington Residential i.e., Ellington Residential and MCGA go up and down completely randomly.
Pair Corralation between Ellington Residential and MCGA
Given the investment horizon of 90 days Ellington Residential Mortgage is expected to generate 2.03 times more return on investment than MCGA. However, Ellington Residential is 2.03 times more volatile than MCGA. It trades about -0.04 of its potential returns per unit of risk. MCGA is currently generating about -0.19 per unit of risk. If you would invest 560.00 in Ellington Residential Mortgage on August 27, 2025 and sell it today you would lose (22.00) from holding Ellington Residential Mortgage or give up 3.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Ellington Residential Mortgage vs. MCGA
Performance |
| Timeline |
| Ellington Residential |
| MCGA |
Ellington Residential and MCGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and MCGA
The main advantage of trading using opposite Ellington Residential and MCGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, MCGA 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 MCGA will offset losses from the drop in MCGA's long position.| Ellington Residential vs. Prism Software | Ellington Residential vs. Space Communication | Ellington Residential vs. Progress Software | Ellington Residential vs. Asure Software |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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