Correlation Between AG Mortgage and National Storage

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

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

Diversification Opportunities for AG Mortgage and National Storage

-0.57

Correlation Coefficient

AG Mortgage  National Storage

Excellent diversification

The 3 months correlation between MITN and National is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and National Storage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage REIT and AG Mortgage 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 AG Mortgage Investment are associated (or correlated) with National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage REIT has no effect on the direction of AG Mortgage i.e., AG Mortgage and National Storage go up and down completely randomly.

Pair Corralation between AG Mortgage and National Storage

Given the investment horizon of 90 days AG Mortgage Investment is expected to generate 0.07 times more return on investment than National Storage. However, AG Mortgage Investment is 13.83 times less risky than National Storage. It trades about 0.25 of its potential returns per unit of risk. National Storage REIT is currently generating about -0.23 per unit of risk. If you would invest  2,509  in AG Mortgage Investment on October 11, 2024 and sell it today you would earn a total of  26.00  from holding AG Mortgage Investment or generate 1.04% return on investment over 90 days.

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

AG Mortgage Investment  vs.  National Storage REIT

AG Mortgage Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 7 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

National Storage REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Storage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, National Storage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AG Mortgage and National Storage

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

The idea behind AG Mortgage Investment and National Storage REIT 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.