Correlation Between AG Mortgage and Ready Capital
Can any of the company-specific risk be diversified away by investing in both AG Mortgage and Ready Capital 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 Ready Capital 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 Ready Capital, you can compare the effects of market volatilities on AG Mortgage and Ready Capital 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 Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Mortgage and Ready Capital.
Diversification Opportunities for AG Mortgage and Ready Capital
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MITT-PC and Ready is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital 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 Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital has no effect on the direction of AG Mortgage i.e., AG Mortgage and Ready Capital go up and down completely randomly.
Pair Corralation between AG Mortgage and Ready Capital
Assuming the 90 days trading horizon AG Mortgage Investment is expected to generate 0.52 times more return on investment than Ready Capital. However, AG Mortgage Investment is 1.92 times less risky than Ready Capital. It trades about 0.19 of its potential returns per unit of risk. Ready Capital is currently generating about 0.09 per unit of risk. If you would invest 2,359 in AG Mortgage Investment on August 30, 2024 and sell it today you would earn a total of 185.00 from holding AG Mortgage Investment or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AG Mortgage Investment vs. Ready Capital
Performance |
| Timeline |
| AG Mortgage Investment |
| Ready Capital |
AG Mortgage and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AG Mortgage and Ready Capital
The main advantage of trading using opposite AG Mortgage and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage position performs unexpectedly, Ready Capital 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 Ready Capital will offset losses from the drop in Ready Capital's long position.| AG Mortgage vs. AG Mortgage Investment | AG Mortgage vs. AG Mortgage Investment | AG Mortgage vs. Invesco Mortgage Capital | AG Mortgage vs. Invesco Mortgage Capital |
| Ready Capital vs. ACRES Commercial Realty | Ready Capital vs. Dynex Capital | Ready Capital vs. PennyMac Mortgage Investment | Ready Capital vs. AG Mortgage 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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