Correlation Between LandBridge Company and AG Mortgage

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

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

Diversification Opportunities for LandBridge Company and AG Mortgage

0.39

Correlation Coefficient

LandBridge Company  AG Mortgage

Weak diversification

The 3 months correlation between LandBridge and MITN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding LandBridge Company LLC 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 LandBridge Company 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 LandBridge Company LLC 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 LandBridge Company i.e., LandBridge Company and AG Mortgage go up and down completely randomly.

Pair Corralation between LandBridge Company and AG Mortgage

Allowing for the 90-day total investment horizon LandBridge Company LLC is expected to generate 24.85 times more return on investment than AG Mortgage. However, LandBridge Company is 24.85 times more volatile than AG Mortgage Investment. It trades about 0.15 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.21 per unit of risk. If you would invest  5,468  in LandBridge Company LLC on December 19, 2024 and sell it today you would earn a total of  2,552  from holding LandBridge Company LLC or generate 46.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

LandBridge Company LLC  vs.  AG Mortgage Investment

LandBridge Company

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LandBridge Company LLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, LandBridge Company sustained solid returns over the last few months and may actually be approaching a breakup point.

AG Mortgage Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 16 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LandBridge Company and AG Mortgage

The main advantage of trading using opposite LandBridge Company and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LandBridge Company 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 LandBridge Company LLC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.