Correlation Between AGNC Investment and Ladder Capital
Can any of the company-specific risk be diversified away by investing in both AGNC Investment and Ladder Capital 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 AGNC Investment and Ladder Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGNC Investment Corp and Ladder Capital Corp, you can compare the effects of market volatilities on AGNC Investment and Ladder Capital 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 AGNC Investment with a short position of Ladder Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC Investment and Ladder Capital.
Diversification Opportunities for AGNC Investment and Ladder Capital
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AGNC and Ladder is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and Ladder Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladder Capital Corp and AGNC 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 AGNC Investment Corp are associated (or correlated) with Ladder Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladder Capital Corp has no effect on the direction of AGNC Investment i.e., AGNC Investment and Ladder Capital go up and down completely randomly.
Pair Corralation between AGNC Investment and Ladder Capital
Assuming the 90 days horizon AGNC Investment is expected to generate 4.88 times less return on investment than Ladder Capital. But when comparing it to its historical volatility, AGNC Investment Corp is 2.79 times less risky than Ladder Capital. It trades about 0.09 of its potential returns per unit of risk. Ladder Capital Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,129 in Ladder Capital Corp on August 28, 2024 and sell it today you would earn a total of 43.00 from holding Ladder Capital Corp or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGNC Investment Corp vs. Ladder Capital Corp
Performance |
| Timeline |
| AGNC Investment Corp |
| Ladder Capital Corp |
AGNC Investment and Ladder Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGNC Investment and Ladder Capital
The main advantage of trading using opposite AGNC Investment and Ladder Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC Investment position performs unexpectedly, Ladder Capital 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 Ladder Capital will offset losses from the drop in Ladder Capital's long position.| AGNC Investment vs. Annaly Capital Management | AGNC Investment vs. Invesco Mortgage Capital | AGNC Investment vs. Invesco Mortgage Capital | AGNC Investment vs. Chimera Investment |
| Ladder Capital vs. KKR Real Estate | Ladder Capital vs. Ares Commercial Real | Ladder Capital vs. Ellington Residential Mortgage | Ladder Capital vs. Claros Mortgage Trust |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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