Correlation Between AG Mortgage and KVH Industries

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

Diversification Opportunities for AG Mortgage and KVH Industries

-0.46

Correlation Coefficient

AG Mortgage  KVH Industries

Very good diversification

The 3 months correlation between MITT and KVH is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of AG Mortgage i.e., AG Mortgage and KVH Industries go up and down completely randomly.

Pair Corralation between AG Mortgage and KVH Industries

Given the investment horizon of 90 days AG Mortgage Investment is expected to generate 0.68 times more return on investment than KVH Industries. However, AG Mortgage Investment is 1.46 times less risky than KVH Industries. It trades about -0.02 of its potential returns per unit of risk. KVH Industries is currently generating about -0.09 per unit of risk. If you would invest  632.00  in AG Mortgage Investment on January 8, 2025 and sell it today you would lose (23.00) from holding AG Mortgage Investment or give up 3.64% of portfolio value over 90 days.

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

AG Mortgage Investment  vs.  KVH Industries

AG Mortgage Investment

Risk-Adjusted Performance

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 comparatively stable basic indicators, AG Mortgage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AG Mortgage and KVH Industries

The main advantage of trading using opposite AG Mortgage and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.

The idea behind AG Mortgage Investment and KVH Industries 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 Transaction History module to view history of all your transactions and understand their impact on performance.