Correlation Between AJX Old and TPG RE

Can any of the company-specific risk be diversified away by investing in both AJX Old and TPG RE 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 AJX Old and TPG RE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AJX Old and TPG RE Finance, you can compare the effects of market volatilities on AJX Old and TPG RE 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 AJX Old with a short position of TPG RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJX Old and TPG RE.

Diversification Opportunities for AJX Old and TPG RE

0.0

Correlation Coefficient

AJX Old  TPG RE

Pay attention - limited upside

The 3 months correlation between AJX and TPG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AJX Old and TPG RE Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG RE Finance and AJX Old 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 AJX Old are associated (or correlated) with TPG RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG RE Finance has no effect on the direction of AJX Old i.e., AJX Old and TPG RE go up and down completely randomly.

Pair Corralation between AJX Old and TPG RE

If you would invest  848.00  in TPG RE Finance on December 26, 2024 and sell it today you would earn a total of  2.00  from holding TPG RE Finance or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AJX Old  vs.  TPG RE Finance

AJX Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days AJX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, AJX Old is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

TPG RE Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPG RE Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TPG RE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AJX Old and TPG RE

The main advantage of trading using opposite AJX Old and TPG RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJX Old position performs unexpectedly, TPG RE 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 TPG RE will offset losses from the drop in TPG RE's long position.

The idea behind AJX Old and TPG RE Finance 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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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.