Correlation Between Ellington Financial and Monroe Capital
Can any of the company-specific risk be diversified away by investing in both Ellington Financial and Monroe Capital 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 Financial and Monroe Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellington Financial LLC and Monroe Capital Corp, you can compare the effects of market volatilities on Ellington Financial and Monroe Capital 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 Financial with a short position of Monroe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Financial and Monroe Capital.
Diversification Opportunities for Ellington Financial and Monroe Capital
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ellington and Monroe is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Financial LLC and Monroe Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monroe Capital Corp and Ellington Financial 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 Financial LLC are associated (or correlated) with Monroe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monroe Capital Corp has no effect on the direction of Ellington Financial i.e., Ellington Financial and Monroe Capital go up and down completely randomly.
Pair Corralation between Ellington Financial and Monroe Capital
Considering the 90-day investment horizon Ellington Financial LLC is expected to generate 1.06 times more return on investment than Monroe Capital. However, Ellington Financial is 1.06 times more volatile than Monroe Capital Corp. It trades about 0.0 of its potential returns per unit of risk. Monroe Capital Corp is currently generating about 0.0 per unit of risk. If you would invest 1,220 in Ellington Financial LLC on January 26, 2024 and sell it today you would lose (65.00) from holding Ellington Financial LLC or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellington Financial LLC vs. Monroe Capital Corp
Performance |
| Timeline |
| Ellington Financial LLC |
| Monroe Capital Corp |
Ellington Financial and Monroe Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellington Financial and Monroe Capital
The main advantage of trading using opposite Ellington Financial and Monroe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Financial position performs unexpectedly, Monroe Capital 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 Monroe Capital will offset losses from the drop in Monroe Capital's long position.| Ellington Financial vs. Ellington Residential Mortgage | Ellington Financial vs. Orchid Island Capital | Ellington Financial vs. ARMOUR Residential REIT | Ellington Financial vs. Dynex Capital |
| Monroe Capital vs. WhiteHorse Finance | Monroe Capital vs. OFS Capital Corp | Monroe Capital vs. Fidus Investment Corp | Monroe Capital vs. BlackRock TCP Capital |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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