Correlation Between AG Mortgage and T Rowe

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

Diversification Opportunities for AG Mortgage and T Rowe

-0.55

Correlation Coefficient

AG Mortgage  T Rowe

Excellent diversification

The 3 months correlation between MITT-PC and TRREX is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of AG Mortgage i.e., AG Mortgage and T Rowe go up and down completely randomly.

Pair Corralation between AG Mortgage and T Rowe

Assuming the 90 days trading horizon AG Mortgage Investment is expected to generate 0.74 times more return on investment than T Rowe. However, AG Mortgage Investment is 1.35 times less risky than T Rowe. It trades about 0.14 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.02 per unit of risk. If you would invest  1,416  in AG Mortgage Investment on September 29, 2024 and sell it today you would earn a total of  1,084  from holding AG Mortgage Investment or generate 76.55% return on investment over 90 days.

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

AG Mortgage Investment  vs.  T Rowe Price

AG Mortgage Investment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, AG Mortgage is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with AG Mortgage and T Rowe

The main advantage of trading using opposite AG Mortgage and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind AG Mortgage Investment and T Rowe Price 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.