Correlation Between Armour Residential and Agnc Investment

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

Diversification Opportunities for Armour Residential and Agnc Investment

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Armour and AGNCO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Armour Residential R and Agnc Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnc Investment Corp and Armour Residential 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 Armour Residential R are associated (or correlated) with Agnc Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnc Investment Corp has no effect on the direction of Armour Residential i.e., Armour Residential and Agnc Investment go up and down completely randomly.

Pair Corralation between Armour Residential and Agnc Investment

Considering the 90-day investment horizon Armour Residential R is expected to under-perform the Agnc Investment. In addition to that, Armour Residential is 3.15 times more volatile than Agnc Investment Corp. It trades about -0.28 of its total potential returns per unit of risk. Agnc Investment Corp is currently generating about -0.19 per unit of volatility. If you would invest  2,200  in Agnc Investment Corp on July 6, 2022 and sell it today you would lose (114.00)  from holding Agnc Investment Corp or give up 5.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Armour Residential R  vs.  Agnc Investment Corp

 Performance (%) 
       Timeline  
Armour Residential 
Armour Performance
0 of 100
Over the last 90 days Armour Residential R has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Armour Price Channel

Agnc Investment Corp 
AGNCO Performance
0 of 100
Over the last 90 days Agnc Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Agnc Investment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

AGNCO Price Channel

Armour Residential and Agnc Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Armour Residential and Agnc Investment

The main advantage of trading using opposite Armour Residential and Agnc Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armour Residential position performs unexpectedly, Agnc Investment 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 Agnc Investment will offset losses from the drop in Agnc Investment's long position.
Armour Residential vs. Amazon Inc
The idea behind Armour Residential R and Agnc Investment Corp 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.
Agnc Investment vs. Amazon Inc
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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