Correlation Between Ellington Residential and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both Ellington Residential and SWK Holdings 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 SWK Holdings 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 SWK Holdings Corp, you can compare the effects of market volatilities on Ellington Residential and SWK Holdings 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and SWK Holdings.
Diversification Opportunities for Ellington Residential and SWK Holdings
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ellington and SWK is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings Corp 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Ellington Residential i.e., Ellington Residential and SWK Holdings go up and down completely randomly.
Pair Corralation between Ellington Residential and SWK Holdings
Given the investment horizon of 90 days Ellington Residential Mortgage is expected to under-perform the SWK Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Ellington Residential Mortgage is 1.73 times less risky than SWK Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The SWK Holdings Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,404 in SWK Holdings Corp on August 19, 2025 and sell it today you would earn a total of 247.00 from holding SWK Holdings Corp or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Residential Mortgage vs. SWK Holdings Corp
Performance |
| Timeline |
| Ellington Residential |
| SWK Holdings Corp |
Ellington Residential and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Residential and SWK Holdings
The main advantage of trading using opposite Ellington Residential and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, SWK Holdings 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 SWK Holdings will offset losses from the drop in SWK Holdings' long position.| Ellington Residential vs. SWK Holdings Corp | Ellington Residential vs. Barings Participation Investors | Ellington Residential vs. Innventure, | Ellington Residential vs. MCGAU |
| SWK Holdings vs. Barings Participation Investors | SWK Holdings vs. Ellington Residential Mortgage | SWK Holdings vs. Triplepoint Venture Growth | SWK Holdings vs. Chicago Atlantic BDC, |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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