Correlation Between AG Mortgage and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both AG Mortgage and Compass Diversified 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 AG Mortgage and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AG Mortgage Investment and Compass Diversified Holdings, you can compare the effects of market volatilities on AG Mortgage and Compass Diversified 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 AG Mortgage with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Mortgage and Compass Diversified.
Diversification Opportunities for AG Mortgage and Compass Diversified
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MITN and Compass is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and AG Mortgage 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 AG Mortgage Investment are associated (or correlated) with Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of AG Mortgage i.e., AG Mortgage and Compass Diversified go up and down completely randomly.
Pair Corralation between AG Mortgage and Compass Diversified
Given the investment horizon of 90 days AG Mortgage Investment is expected to generate 0.33 times more return on investment than Compass Diversified. However, AG Mortgage Investment is 3.02 times less risky than Compass Diversified. It trades about 0.11 of its potential returns per unit of risk. Compass Diversified Holdings is currently generating about -0.01 per unit of risk. If you would invest 2,489 in AG Mortgage Investment on October 24, 2024 and sell it today you would earn a total of 54.00 from holding AG Mortgage Investment or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AG Mortgage Investment vs. Compass Diversified Holdings
Performance |
| Timeline |
| AG Mortgage Investment |
| Compass Diversified |
AG Mortgage and Compass Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AG Mortgage and Compass Diversified
The main advantage of trading using opposite AG Mortgage and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage position performs unexpectedly, Compass Diversified 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 Compass Diversified will offset losses from the drop in Compass Diversified's long position.| AG Mortgage vs. Amkor Technology | AG Mortgage vs. Boston Omaha Corp | AG Mortgage vs. Stagwell | AG Mortgage vs. NioCorp Developments Ltd |
| Compass Diversified vs. RCI Hospitality Holdings | Compass Diversified vs. Ballys Corp | Compass Diversified vs. Park Hotels Resorts | Compass Diversified vs. Playa Hotels Resorts |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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