Correlation Between Arbor Realty and AGNC Investment
Can any of the company-specific risk be diversified away by investing in both Arbor Realty 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 Arbor Realty and AGNC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Realty Trust and AGNC Investment Corp, you can compare the effects of market volatilities on Arbor Realty 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 Arbor Realty with a short position of AGNC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and AGNC Investment.
Diversification Opportunities for Arbor Realty and AGNC Investment
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arbor and AGNC is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust 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 Arbor Realty 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 Arbor Realty Trust 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 Arbor Realty i.e., Arbor Realty and AGNC Investment go up and down completely randomly.
Pair Corralation between Arbor Realty and AGNC Investment
Assuming the 90 days trading horizon Arbor Realty is expected to generate 1.1 times less return on investment than AGNC Investment. In addition to that, Arbor Realty is 1.79 times more volatile than AGNC Investment Corp. It trades about 0.05 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.1 per unit of volatility. If you would invest 1,771 in AGNC Investment Corp on September 2, 2024 and sell it today you would earn a total of 754.00 from holding AGNC Investment Corp or generate 42.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Realty Trust vs. AGNC Investment Corp
Performance |
| Timeline |
| Arbor Realty Trust |
| AGNC Investment Corp |
Arbor Realty and AGNC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Realty and AGNC Investment
The main advantage of trading using opposite Arbor Realty and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty 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.| Arbor Realty vs. Arbor Realty Trust | Arbor Realty vs. Arbor Realty Trust | Arbor Realty vs. ACRES Commercial Realty | Arbor Realty vs. ARMOUR Residential REIT |
| AGNC Investment vs. AGNC Investment Corp | AGNC Investment vs. AGNC Investment Corp | AGNC Investment vs. AGNC Investment Corp | AGNC Investment vs. Annaly Capital Management |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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