15.53 -0.16 (-1.02%) Sell

EFC investors hurt by serious losses

13 min read

ELLINGTON FINANCIAL LLC was among the worst performers on Wednesday. It fell by -1.02% to close at 15.53. It is currently trading +9% above it's 52 week low of 14.12 and is down only -7% from it's 52 week high.

[Themes containing EFC]

Buy-and-Hold investors in EFC experienced a maximum drawdown of -5.25% over the last three months. It fell by -2.27% during this bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.


EFC has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 25 Feb, 2016 to 29 Jan, 2018. Over the last 2 years 11 months and 8 days, EFC underperformed the SP500 index on 49% days. Which indicates that on days EFC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

EFC returned losses on 51% days in the last three months. During this time, it delivered on average -0.03% per day. It delivered it's best daily return of +2.42%, during this period, on Thursday, 8 Nov, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 13 Sep, 2018 and went on till 19 Sep, 2018. This bullish trend returned +1.93% to investors.

During the last year EFC had 7 profitable months and 5 loss making months. EFC returned profits in fewer months than SP500 index. EFC significantly outperformed SP500 index in May 2018, when it returned +6.84% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. EFC had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both EFC and SP500 index significantly outperform during months when quarterly/annual results are announced.

"A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.

EFC is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in EFC's volatility from 28 Sep, 2018 to 6 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that EFC has significant positive skewness in it's return distribution. This indicates that investors can expect EFC to recover from drawdowns quickly. Which makes EFC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than EFC. Therefore, SP500 must receive a lower allocation than EFC in your portfolio. EFC usually has shorter drawdown period than the SP500 index.

Based on your interest in EFC you may find it interesting to know that CSCO is a large cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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