Correlation Between PACIFIC and AG Mortgage

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Can any of the company-specific risk be diversified away by investing in both PACIFIC 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 PACIFIC and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACIFIC GAS AND and AG Mortgage Investment, you can compare the effects of market volatilities on PACIFIC 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 PACIFIC with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACIFIC and AG Mortgage.

Diversification Opportunities for PACIFIC and AG Mortgage

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PACIFIC and MITN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS AND 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 PACIFIC 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 PACIFIC GAS AND 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 PACIFIC i.e., PACIFIC and AG Mortgage go up and down completely randomly.

Pair Corralation between PACIFIC and AG Mortgage

Assuming the 90 days trading horizon PACIFIC GAS AND is expected to under-perform the AG Mortgage. But the bond apears to be less risky and, when comparing its historical volatility, PACIFIC GAS AND is 1.44 times less risky than AG Mortgage. The bond trades about -0.05 of its potential returns per unit of risk. The AG Mortgage Investment is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,366  in AG Mortgage Investment on November 3, 2024 and sell it today you would earn a total of  141.00  from holding AG Mortgage Investment or generate 5.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.2%
ValuesDaily Returns

PACIFIC GAS AND  vs.  AG Mortgage Investment

 Performance 
       Timeline  
PACIFIC GAS AND 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
AG Mortgage Investment 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AG Mortgage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PACIFIC and AG Mortgage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PACIFIC and AG Mortgage

The main advantage of trading using opposite PACIFIC and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACIFIC 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.
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The idea behind PACIFIC GAS AND 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.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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