Correlation Between Highest Performances and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both Highest Performances 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 Highest Performances and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highest Performances Holdings and AG Mortgage Investment, you can compare the effects of market volatilities on Highest Performances 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 Highest Performances with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highest Performances and AG Mortgage.
Diversification Opportunities for Highest Performances and AG Mortgage
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highest and MITT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Highest Performances Holdings 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 Highest Performances 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 Highest Performances Holdings 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 Highest Performances i.e., Highest Performances and AG Mortgage go up and down completely randomly.
Pair Corralation between Highest Performances and AG Mortgage
Considering the 90-day investment horizon Highest Performances Holdings is expected to generate 4.56 times more return on investment than AG Mortgage. However, Highest Performances is 4.56 times more volatile than AG Mortgage Investment. It trades about -0.03 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.17 per unit of risk. If you would invest 30.00 in Highest Performances Holdings on October 24, 2024 and sell it today you would lose (3.00) from holding Highest Performances Holdings or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highest Performances Holdings vs. AG Mortgage Investment
Performance |
| Timeline |
| Highest Performances |
| AG Mortgage Investment |
Highest Performances and AG Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highest Performances and AG Mortgage
The main advantage of trading using opposite Highest Performances and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highest Performances 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.| Highest Performances vs. Elite Education Group | Highest Performances vs. Avis Budget Group | Highest Performances vs. Pearson PLC ADR | Highest Performances vs. China Aircraft Leasing |
| AG Mortgage vs. New York Mortgage | AG Mortgage vs. Ellington Residential Mortgage | AG Mortgage vs. Invesco Mortgage Capital | AG Mortgage vs. TPG RE Finance |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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