Correlation Between WisdomTree and AG Mortgage

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

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

Diversification Opportunities for WisdomTree and AG Mortgage

-0.01

Correlation Coefficient

WisdomTree  AG Mortgage

Good diversification

The 3 months correlation between WisdomTree and MITT is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree 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 WisdomTree 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 WisdomTree 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 WisdomTree i.e., WisdomTree and AG Mortgage go up and down completely randomly.

Pair Corralation between WisdomTree and AG Mortgage

Allowing for the 90-day total investment horizon WisdomTree is expected to generate 1.27 times more return on investment than AG Mortgage. However, WisdomTree is 1.27 times more volatile than AG Mortgage Investment. It trades about -0.03 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.09 per unit of risk. If you would invest  1,044  in WisdomTree on October 25, 2024 and sell it today you would lose (53.00) from holding WisdomTree or give up 5.08% of portfolio value over 90 days.

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

WisdomTree  vs.  AG Mortgage Investment

WisdomTree

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WisdomTree is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

AG Mortgage Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AG Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with WisdomTree and AG Mortgage

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

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.