Correlation Between Ellington Residential and C3 Ai

Can any of the company-specific risk be diversified away by investing in both Ellington Residential and C3 Ai 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 C3 Ai 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 C3 Ai Inc, you can compare the effects of market volatilities on Ellington Residential and C3 Ai 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 C3 Ai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellington Residential and C3 Ai.

Diversification Opportunities for Ellington Residential and C3 Ai

-0.36

Correlation Coefficient

Ellington Residential  C3 Ai

Very good diversification

The 3 months correlation between Ellington and C3 Ai is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage and C3 Ai Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C3 Ai Inc 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 C3 Ai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C3 Ai Inc has no effect on the direction of Ellington Residential i.e., Ellington Residential and C3 Ai go up and down completely randomly.

Pair Corralation between Ellington Residential and C3 Ai

Given the investment horizon of 90 days Ellington Residential Mortgage is expected to generate 0.7 times more return on investment than C3 Ai. However, Ellington Residential Mortgage is 1.43 times less risky than C3 Ai. It trades about -0.05 of its potential returns per unit of risk. C3 Ai Inc is currently generating about -0.36 per unit of risk. If you would invest  691.00  in Ellington Residential Mortgage on January 25, 2024 and sell it today you would lose (16.00) from holding Ellington Residential Mortgage or give up 2.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ellington Residential Mortgage  vs.  C3 Ai Inc

Ellington Residential

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ellington Residential Mortgage are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Ellington Residential displayed solid returns over the last few months and may actually be approaching a breakup point.

C3 Ai Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C3 Ai Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, C3 Ai is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ellington Residential and C3 Ai

The main advantage of trading using opposite Ellington Residential and C3 Ai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential position performs unexpectedly, C3 Ai 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 C3 Ai will offset losses from the drop in C3 Ai's long position.

The idea behind Ellington Residential Mortgage and C3 Ai Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..