Correlation Between AG Mortgage and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both AG Mortgage and Rithm 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 Rithm 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 Rithm Capital Corp, you can compare the effects of market volatilities on AG Mortgage and Rithm 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 Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Mortgage and Rithm Capital.
Diversification Opportunities for AG Mortgage and Rithm Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MITT and Rithm is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp 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 Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of AG Mortgage i.e., AG Mortgage and Rithm Capital go up and down completely randomly.
Pair Corralation between AG Mortgage and Rithm Capital
Given the investment horizon of 90 days AG Mortgage Investment is expected to generate 5.22 times more return on investment than Rithm Capital. However, AG Mortgage is 5.22 times more volatile than Rithm Capital Corp. It trades about 0.07 of its potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.22 per unit of risk. If you would invest 497.00 in AG Mortgage Investment on August 27, 2024 and sell it today you would earn a total of 175.00 from holding AG Mortgage Investment or generate 35.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AG Mortgage Investment vs. Rithm Capital Corp
Performance |
| Timeline |
| AG Mortgage Investment |
| Rithm Capital Corp |
AG Mortgage and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AG Mortgage and Rithm Capital
The main advantage of trading using opposite AG Mortgage and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage position performs unexpectedly, Rithm 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 Rithm Capital will offset losses from the drop in Rithm Capital's long position.| AG Mortgage vs. New York Mortgage | AG Mortgage vs. Ellington Residential Mortgage | AG Mortgage vs. Invesco Mortgage Capital | AG Mortgage vs. TPG RE Finance |
| Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage Investment | Rithm Capital vs. AGNC Investment Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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