Correlation Between ARMOUR Residential and AGNC Investment
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 REIT 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
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARMOUR and AGNC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ARMOUR Residential REIT 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 REIT 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 is expected to generate 70.7 times less return on investment than AGNC Investment. In addition to that, ARMOUR Residential is 1.13 times more volatile than AGNC Investment Corp. It trades about 0.0 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.05 per unit of volatility. If you would invest 729.00 in AGNC Investment Corp on August 27, 2024 and sell it today you would earn a total of 245.00 from holding AGNC Investment Corp or generate 33.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARMOUR Residential REIT vs. AGNC Investment Corp
Performance |
| Timeline |
| ARMOUR Residential REIT |
| AGNC Investment Corp |
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. Blackstone Mortgage Trust | ARMOUR Residential vs. Omega Healthcare Investors | ARMOUR Residential vs. Medical Properties Trust |
| AGNC Investment vs. Blackstone Mortgage Trust | AGNC Investment vs. Omega Healthcare Investors | AGNC Investment vs. Medical Properties 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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