Correlation Between Rithm Capital and AGNC Investment
Can any of the company-specific risk be diversified away by investing in both Rithm Capital 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 Rithm Capital and AGNC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rithm Capital Corp and AGNC Investment Corp, you can compare the effects of market volatilities on Rithm Capital 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 Rithm Capital with a short position of AGNC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and AGNC Investment.
Diversification Opportunities for Rithm Capital and AGNC Investment
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rithm and AGNC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp 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 Rithm Capital 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 Rithm Capital Corp 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 Rithm Capital i.e., Rithm Capital and AGNC Investment go up and down completely randomly.
Pair Corralation between Rithm Capital and AGNC Investment
Assuming the 90 days trading horizon Rithm Capital Corp is expected to generate 1.16 times more return on investment than AGNC Investment. However, Rithm Capital is 1.16 times more volatile than AGNC Investment Corp. It trades about 0.14 of its potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.09 per unit of risk. If you would invest 1,771 in Rithm Capital Corp on August 28, 2024 and sell it today you would earn a total of 693.00 from holding Rithm Capital Corp or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Rithm Capital Corp vs. AGNC Investment Corp
Performance |
| Timeline |
| Rithm Capital Corp |
| AGNC Investment Corp |
Rithm Capital and AGNC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rithm Capital and AGNC Investment
The main advantage of trading using opposite Rithm Capital and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital 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 Rithm Capital Corp 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. 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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