Correlation Between Snap and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and AG Mortgage Investment, you can compare the effects of market volatilities on Snap 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 Snap with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and AG Mortgage.
Diversification Opportunities for Snap and AG Mortgage
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and MITT-PB is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc 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 Snap 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 Snap Inc 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 Snap i.e., Snap and AG Mortgage go up and down completely randomly.
Pair Corralation between Snap and AG Mortgage
Given the investment horizon of 90 days Snap Inc is expected to under-perform the AG Mortgage. In addition to that, Snap is 4.26 times more volatile than AG Mortgage Investment. It trades about -0.11 of its total potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.01 per unit of volatility. If you would invest 2,249 in AG Mortgage Investment on August 31, 2024 and sell it today you would lose (4.00) from holding AG Mortgage Investment or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. AG Mortgage Investment
Performance |
| Timeline |
| Snap Inc |
| AG Mortgage Investment |
Snap and AG Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and AG Mortgage
The main advantage of trading using opposite Snap and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and AG Mortgage Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AG Mortgage vs. MFA Financial | AG Mortgage vs. Chimera Investment | AG Mortgage vs. Two Harbors Investment | AG Mortgage vs. Chimera 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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