Correlation Between NexPoint Real and AGNC Investment
Can any of the company-specific risk be diversified away by investing in both NexPoint Real 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 NexPoint Real and AGNC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexPoint Real Estate and AGNC Investment Corp, you can compare the effects of market volatilities on NexPoint Real 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 NexPoint Real with a short position of AGNC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Real and AGNC Investment.
Diversification Opportunities for NexPoint Real and AGNC Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NexPoint and AGNC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate 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 NexPoint Real 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 NexPoint Real Estate 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 NexPoint Real i.e., NexPoint Real and AGNC Investment go up and down completely randomly.
Pair Corralation between NexPoint Real and AGNC Investment
Assuming the 90 days trading horizon NexPoint Real Estate is expected to under-perform the AGNC Investment. In addition to that, NexPoint Real is 2.59 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 0.09 per unit of volatility. If you would invest 2,567 in AGNC Investment Corp on August 28, 2024 and sell it today you would earn a total of 20.00 from holding AGNC Investment Corp or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Real Estate vs. AGNC Investment Corp
Performance |
| Timeline |
| NexPoint Real Estate |
| AGNC Investment Corp |
NexPoint Real and AGNC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Real and AGNC Investment
The main advantage of trading using opposite NexPoint Real and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Real 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.The idea behind NexPoint Real Estate 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. Annaly Capital Management | AGNC Investment vs. Invesco Mortgage Capital | AGNC Investment vs. Invesco Mortgage Capital | AGNC Investment vs. Chimera Investment |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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