Correlation Between Morgan Stanley and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley 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 Morgan Stanley and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and AG Mortgage Investment, you can compare the effects of market volatilities on Morgan Stanley 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 Morgan Stanley with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and AG Mortgage.
Diversification Opportunities for Morgan Stanley and AG Mortgage
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Morgan and MITN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley i.e., Morgan Stanley and AG Mortgage go up and down completely randomly.
Pair Corralation between Morgan Stanley and AG Mortgage
Allowing for the 90-day total investment horizon Morgan Stanley is expected to under-perform the AG Mortgage. In addition to that, Morgan Stanley is 10.14 times more volatile than AG Mortgage Investment. It trades about -0.01 of its total potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.19 per unit of volatility. If you would invest 2,460 in AG Mortgage Investment on December 18, 2024 and sell it today you would earn a total of 57.00 from holding AG Mortgage Investment or generate 2.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.31% |
Values | Daily Returns |
Morgan Stanley vs. AG Mortgage Investment
Performance |
Timeline |
Morgan Stanley |
AG Mortgage Investment |
Morgan Stanley and AG Mortgage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and AG Mortgage
The main advantage of trading using opposite Morgan Stanley and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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.Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Riot Blockchain | Morgan Stanley vs. Marathon Digital Holdings | Morgan Stanley vs. Applied Digital |
AG Mortgage vs. Balchem | AG Mortgage vs. Cementos Pacasmayo SAA | AG Mortgage vs. Avient Corp | AG Mortgage vs. Griffon |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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