Correlation Between BRT Realty and Ellington Residential
Can any of the company-specific risk be diversified away by investing in both BRT Realty 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 BRT Realty and Ellington Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRT Realty Trust and Ellington Residential Mortgage, you can compare the effects of market volatilities on BRT Realty 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 BRT Realty with a short position of Ellington Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRT Realty and Ellington Residential.
Diversification Opportunities for BRT Realty and Ellington Residential
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between BRT and Ellington is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BRT Realty Trust and Ellington Residential Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Residential and BRT Realty 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 BRT Realty Trust 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 BRT Realty i.e., BRT Realty and Ellington Residential go up and down completely randomly.
Pair Corralation between BRT Realty and Ellington Residential
Considering the 90-day investment horizon BRT Realty Trust is expected to under-perform the Ellington Residential. But the stock apears to be less risky and, when comparing its historical volatility, BRT Realty Trust is 1.03 times less risky than Ellington Residential. The stock trades about -0.01 of its potential returns per unit of risk. The Ellington Residential Mortgage is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 686.00 in Ellington Residential Mortgage on January 18, 2024 and sell it today you would lose (26.00) from holding Ellington Residential Mortgage or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRT Realty Trust vs. Ellington Residential Mortgage
Performance |
| Timeline |
| BRT Realty Trust |
| Ellington Residential |
BRT Realty and Ellington Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRT Realty and Ellington Residential
The main advantage of trading using opposite BRT Realty and Ellington Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRT Realty 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.| BRT Realty vs. Nexpoint Residential Trust | BRT Realty vs. Centerspace | BRT Realty vs. Veris Residential | BRT Realty vs. Apartment Income REIT |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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