Correlation Between Chimera Investment and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both Chimera Investment and AG Mortgage 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 Chimera Investment and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and AG Mortgage Investment, you can compare the effects of market volatilities on Chimera Investment and AG Mortgage 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 Chimera Investment with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and AG Mortgage.
Diversification Opportunities for Chimera Investment and AG Mortgage
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chimera and MITT-PB is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and AG Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AG Mortgage Investment and Chimera Investment 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 Chimera Investment are associated (or correlated) with AG Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AG Mortgage Investment has no effect on the direction of Chimera Investment i.e., Chimera Investment and AG Mortgage go up and down completely randomly.
Pair Corralation between Chimera Investment and AG Mortgage
Assuming the 90 days trading horizon Chimera Investment is expected to generate 0.44 times more return on investment than AG Mortgage. However, Chimera Investment is 2.29 times less risky than AG Mortgage. It trades about 0.17 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.05 per unit of risk. If you would invest 2,470 in Chimera Investment on August 27, 2024 and sell it today you would earn a total of 28.00 from holding Chimera Investment or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chimera Investment vs. AG Mortgage Investment
Performance |
| Timeline |
| Chimera Investment |
| AG Mortgage Investment |
Chimera Investment and AG Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and AG Mortgage
The main advantage of trading using opposite Chimera Investment and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment position performs unexpectedly, AG Mortgage 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 AG Mortgage will offset losses from the drop in AG Mortgage's long position.| Chimera Investment vs. PennyMac Mortgage Investment | Chimera Investment vs. Two Harbors Investment | Chimera Investment vs. Chimera Investment | Chimera Investment vs. PennyMac Mortgage Investment |
| AG Mortgage vs. New York Mortgage | AG Mortgage vs. New York Mortgage | AG Mortgage vs. Two Harbors Investment | AG Mortgage vs. Two Harbors 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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