Correlation Between AG Mortgage and WT Offshore

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

Diversification Opportunities for AG Mortgage and WT Offshore

-0.47

Correlation Coefficient

AG Mortgage  WT Offshore

Very good diversification

The 3 months correlation between MITP and WTI is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore 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 WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of AG Mortgage i.e., AG Mortgage and WT Offshore go up and down completely randomly.

Pair Corralation between AG Mortgage and WT Offshore

Given the investment horizon of 90 days AG Mortgage Investment is expected to generate 0.09 times more return on investment than WT Offshore. However, AG Mortgage Investment is 10.78 times less risky than WT Offshore. It trades about 0.13 of its potential returns per unit of risk. WT Offshore is currently generating about -0.06 per unit of risk. If you would invest  2,377  in AG Mortgage Investment on October 26, 2024 and sell it today you would earn a total of  167.00  from holding AG Mortgage Investment or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	34.62%
Values	Daily Returns

AG Mortgage Investment  vs.  WT Offshore

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 recent stock price agitation, may contribute to short-term losses for the retail investors.

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AG Mortgage and WT Offshore

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

The idea behind AG Mortgage Investment and WT Offshore 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.

Check out your portfolio center.

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.