Correlation Between LBTCOR and AG Mortgage

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

By analyzing existing cross correlation between LBTCOR 10875 15 JAN 31 and AG Mortgage Investment, you can compare the effects of market volatilities on LBTCOR 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 LBTCOR with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBTCOR and AG Mortgage.

Diversification Opportunities for LBTCOR and AG Mortgage

0.07

Correlation Coefficient

LBTCOR  AG Mortgage

Significant diversification

The 3 months correlation between LBTCOR and MITP is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding LBTCOR 10875 15 JAN 31 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 LBTCOR 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 LBTCOR 10875 15 JAN 31 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 LBTCOR i.e., LBTCOR and AG Mortgage go up and down completely randomly.

Pair Corralation between LBTCOR and AG Mortgage

Assuming the 90 days trading horizon LBTCOR 10875 15 JAN 31 is expected to generate 6.73 times more return on investment than AG Mortgage. However, LBTCOR is 6.73 times more volatile than AG Mortgage Investment. It trades about 0.06 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.13 per unit of risk. If you would invest  9,725  in LBTCOR 10875 15 JAN 31 on October 26, 2024 and sell it today you would earn a total of  999.00  from holding LBTCOR 10875 15 JAN 31 or generate 10.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.82%
Values	Daily Returns

LBTCOR 10875 15 JAN 31  vs.  AG Mortgage Investment

LBTCOR 10875 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LBTCOR 10875 15 JAN 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LBTCOR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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

Pair Trading with LBTCOR and AG Mortgage

The main advantage of trading using opposite LBTCOR and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBTCOR 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 LBTCOR 10875 15 JAN 31 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.