Correlation Between Carlyle and AG Mortgage

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

By analyzing existing cross correlation between Carlyle Group and AG Mortgage Investment, you can compare the effects of market volatilities on Carlyle 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 Carlyle with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and AG Mortgage.

Diversification Opportunities for Carlyle and AG Mortgage

-0.5

Correlation Coefficient

Carlyle  AG Mortgage

Very good diversification

The 3 months correlation between Carlyle and MITT is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group 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 Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and AG Mortgage go up and down completely randomly.

Pair Corralation between Carlyle and AG Mortgage

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 1.36 times more return on investment than AG Mortgage. However, Carlyle is 1.36 times more volatile than AG Mortgage Investment. It trades about -0.04 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.13 per unit of risk. If you would invest  5,274  in Carlyle Group on October 10, 2024 and sell it today you would lose (119.00) from holding Carlyle Group or give up 2.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Carlyle Group  vs.  AG Mortgage Investment

Carlyle Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Carlyle may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AG Mortgage Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AG Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Carlyle and AG Mortgage

The main advantage of trading using opposite Carlyle and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle Group 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.