Correlation Between Chimera Investment and AG Mortgage

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Can any of the company-specific risk be diversified away by investing in both Chimera Investment 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 Chimera Investment and AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and AG Mortgage Investment, you can compare the effects of market volatilities on Chimera Investment 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 Chimera Investment with a short position of AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and AG Mortgage.

Diversification Opportunities for Chimera Investment and AG Mortgage

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Chimera and MITT-PB is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment 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 Chimera Investment 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 Chimera Investment 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 Chimera Investment i.e., Chimera Investment and AG Mortgage go up and down completely randomly.

Pair Corralation between Chimera Investment and AG Mortgage

Assuming the 90 days trading horizon Chimera Investment is expected to generate 0.32 times more return on investment than AG Mortgage. However, Chimera Investment is 3.1 times less risky than AG Mortgage. It trades about 0.3 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.06 per unit of risk. If you would invest  2,445  in Chimera Investment on August 12, 2024 and sell it today you would earn a total of  60.00  from holding Chimera Investment or generate 2.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Chimera Investment  vs.  AG Mortgage Investment

 Performance 
       Timeline  
Chimera Investment 

Risk-Adjusted Performance

15 of 100

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

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, AG Mortgage may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Chimera Investment and AG Mortgage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chimera Investment and AG Mortgage

The main advantage of trading using opposite Chimera Investment and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment 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 Chimera Investment 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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