Correlation Between Ellington Residential and MCGAU
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and MCGAU 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 MCGAU 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 MCGAU, you can compare the effects of market volatilities on Ellington Residential and MCGAU 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 MCGAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and MCGAU.
Diversification Opportunities for Ellington Residential and MCGAU
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ellington and MCGAU is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and MCGAU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCGAU 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 MCGAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCGAU has no effect on the direction of Ellington Residential i.e., Ellington Residential and MCGAU go up and down completely randomly.
Pair Corralation between Ellington Residential and MCGAU
Given the investment horizon of 90 days Ellington Residential Mortgage is expected to generate 1.29 times more return on investment than MCGAU. However, Ellington Residential is 1.29 times more volatile than MCGAU. It trades about -0.02 of its potential returns per unit of risk. MCGAU is currently generating about -0.21 per unit of risk. If you would invest 554.00 in Ellington Residential Mortgage on August 29, 2025 and sell it today you would lose (11.00) from holding Ellington Residential Mortgage or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Residential Mortgage vs. MCGAU
Performance |
| Timeline |
| Ellington Residential |
| MCGAU |
Ellington Residential and MCGAU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and MCGAU
The main advantage of trading using opposite Ellington Residential and MCGAU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, MCGAU 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 MCGAU will offset losses from the drop in MCGAU's long position.| Ellington Residential vs. GungHo Online Entertainment | Ellington Residential vs. Grupo Carso SAB | Ellington Residential vs. Surf Air Mobility | Ellington Residential vs. EvoAir Holdings |
| MCGAU vs. BioNTech SE | MCGAU vs. Wireless Xcessories Group | MCGAU vs. NanoTech Entertainment | MCGAU vs. Pintec Technology Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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