Correlation Between AG Mortgage and Top Frontier

Can any of the company-specific risk be diversified away by investing in both AG Mortgage and Top Frontier 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 Top Frontier 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 Top Frontier Investment, you can compare the effects of market volatilities on AG Mortgage and Top Frontier 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 Top Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of AG Mortgage and Top Frontier.

Diversification Opportunities for AG Mortgage and Top Frontier

0.0

Correlation Coefficient

AG Mortgage  Top Frontier

Pay attention - limited upside

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

Pair Corralation between AG Mortgage and Top Frontier

If you would invest  2,377  in AG Mortgage Investment on October 24, 2024 and sell it today you would earn a total of  170.00  from holding AG Mortgage Investment or generate 7.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	68.7%
Values	Daily Returns

AG Mortgage Investment  vs.  Top Frontier Investment

AG Mortgage Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AG Mortgage is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Top Frontier Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Top Frontier 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 Top Frontier

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

The idea behind AG Mortgage Investment and Top Frontier 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.