Correlation Between KVH Industries and AG Mortgage

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

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

Diversification Opportunities for KVH Industries and AG Mortgage

-0.52

Correlation Coefficient

KVH Industries  AG Mortgage

Excellent diversification

The 3 months correlation between KVH and MITT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries 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 KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and AG Mortgage go up and down completely randomly.

Pair Corralation between KVH Industries and AG Mortgage

Given the investment horizon of 90 days KVH Industries is expected to under-perform the AG Mortgage. In addition to that, KVH Industries is 1.66 times more volatile than AG Mortgage Investment. It trades about -0.06 of its total potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.07 per unit of volatility. If you would invest  632.00  in AG Mortgage Investment on January 7, 2025 and sell it today you would earn a total of  38.00  from holding AG Mortgage Investment or generate 6.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

KVH Industries  vs.  AG Mortgage Investment

KVH Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KVH Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

AG Mortgage Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AG Mortgage may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with KVH Industries and AG Mortgage

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