Correlation Between Waste Management and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and AG Mortgage Investment, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and AG Mortgage.
Diversification Opportunities for Waste Management and AG Mortgage
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waste and MITN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management 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 Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and AG Mortgage go up and down completely randomly.
Pair Corralation between Waste Management and AG Mortgage
Allowing for the 90-day total investment horizon Waste Management is expected to generate 4.12 times more return on investment than AG Mortgage. However, Waste Management is 4.12 times more volatile than AG Mortgage Investment. It trades about 0.03 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.11 per unit of risk. If you would invest 20,683 in Waste Management on October 24, 2024 and sell it today you would earn a total of 488.00 from holding Waste Management or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. AG Mortgage Investment
Performance |
| Timeline |
| Waste Management |
| AG Mortgage Investment |
Waste Management and AG Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and AG Mortgage
The main advantage of trading using opposite Waste Management and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
| AG Mortgage vs. Amkor Technology | AG Mortgage vs. Boston Omaha Corp | AG Mortgage vs. Stagwell | AG Mortgage vs. NioCorp Developments Ltd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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