Correlation Between T Rowe and AGNC Investment
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and AGNC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and AGNC Investment Corp, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of AGNC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and AGNC Investment.
Diversification Opportunities for T Rowe and AGNC Investment
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RRTLX and AGNC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and AGNC Investment go up and down completely randomly.
Pair Corralation between T Rowe and AGNC Investment
Assuming the 90 days horizon T Rowe is expected to generate 1.16 times less return on investment than AGNC Investment. But when comparing it to its historical volatility, T Rowe Price is 1.24 times less risky than AGNC Investment. It trades about 0.13 of its potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,426 in AGNC Investment Corp on August 27, 2024 and sell it today you would earn a total of 161.00 from holding AGNC Investment Corp or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. AGNC Investment Corp
Performance |
| Timeline |
| T Rowe Price |
| AGNC Investment Corp |
T Rowe and AGNC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and AGNC Investment
The main advantage of trading using opposite T Rowe and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.| T Rowe vs. T Rowe Price | T Rowe vs. Trowe Price Retirement | T Rowe vs. T Rowe Price | T Rowe vs. T Rowe Price |
| AGNC Investment vs. Annaly Capital Management | AGNC Investment vs. AGNC Investment Corp | AGNC Investment vs. Invesco Mortgage Capital | AGNC Investment vs. Invesco Mortgage Capital |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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