Correlation Between AGNC Investment and TPG RE
Can any of the company-specific risk be diversified away by investing in both AGNC Investment and TPG RE 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 TPG RE 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 TPG RE Finance, you can compare the effects of market volatilities on AGNC Investment and TPG RE 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 TPG RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC Investment and TPG RE.
Diversification Opportunities for AGNC Investment and TPG RE
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AGNC and TPG is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and TPG RE Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG RE Finance 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 TPG RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG RE Finance has no effect on the direction of AGNC Investment i.e., AGNC Investment and TPG RE go up and down completely randomly.
Pair Corralation between AGNC Investment and TPG RE
Assuming the 90 days horizon AGNC Investment is expected to generate 9.44 times less return on investment than TPG RE. But when comparing it to its historical volatility, AGNC Investment Corp is 3.45 times less risky than TPG RE. It trades about 0.04 of its potential returns per unit of risk. TPG RE Finance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 850.00 in TPG RE Finance on November 9, 2024 and sell it today you would earn a total of 22.00 from holding TPG RE Finance or generate 2.59% 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. TPG RE Finance
Performance |
| Timeline |
| AGNC Investment Corp |
| TPG RE Finance |
AGNC Investment and TPG RE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGNC Investment and TPG RE
The main advantage of trading using opposite AGNC Investment and TPG RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC Investment position performs unexpectedly, TPG RE 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 TPG RE will offset losses from the drop in TPG RE's long position.| AGNC Investment vs. Annaly Capital Management | AGNC Investment vs. Annaly Capital Management | AGNC Investment vs. AGNC Investment Corp | AGNC Investment vs. New York Mortgage |
| TPG RE vs. Ellington Residential Mortgage | TPG RE vs. Ares Commercial Real | TPG RE vs. Nexpoint Real Estate | TPG RE vs. Ellington Financial |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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