Correlation Between AG Mortgage and Armada Hflr
Can any of the company-specific risk be diversified away by investing in both AG Mortgage and Armada Hflr 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 Armada Hflr 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 Armada Hflr Pr, you can compare the effects of market volatilities on AG Mortgage and Armada Hflr 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 Armada Hflr. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Mortgage and Armada Hflr.
Diversification Opportunities for AG Mortgage and Armada Hflr
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MITT-PA and Armada is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr 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 Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of AG Mortgage i.e., AG Mortgage and Armada Hflr go up and down completely randomly.
Pair Corralation between AG Mortgage and Armada Hflr
Assuming the 90 days trading horizon AG Mortgage Investment is expected to under-perform the Armada Hflr. But the preferred stock apears to be less risky and, when comparing its historical volatility, AG Mortgage Investment is 1.82 times less risky than Armada Hflr. The preferred stock trades about -0.18 of its potential returns per unit of risk. The Armada Hflr Pr is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,092 in Armada Hflr Pr on August 30, 2024 and sell it today you would earn a total of 17.00 from holding Armada Hflr Pr or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AG Mortgage Investment vs. Armada Hflr Pr
Performance |
| Timeline |
| AG Mortgage Investment |
| Armada Hflr Pr |
AG Mortgage and Armada Hflr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AG Mortgage and Armada Hflr
The main advantage of trading using opposite AG Mortgage and Armada Hflr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage position performs unexpectedly, Armada Hflr 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 Armada Hflr will offset losses from the drop in Armada Hflr's long position.| AG Mortgage vs. New York Mortgage | AG Mortgage vs. New York Mortgage | AG Mortgage vs. Two Harbors Investment | AG Mortgage vs. Two Harbors Investment |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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