Correlation Between Playmates Toys and AGNC INVESTMENT

Can any of the company-specific risk be diversified away by investing in both Playmates Toys 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 Playmates Toys and AGNC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Playmates Toys Limited and AGNC INVESTMENT, you can compare the effects of market volatilities on Playmates Toys 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 Playmates Toys with a short position of AGNC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and AGNC INVESTMENT.

Diversification Opportunities for Playmates Toys and AGNC INVESTMENT

-0.14

Correlation Coefficient

Playmates Toys  AGNC INVESTMENT

Good diversification

The 3 months correlation between Playmates and AGNC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and AGNC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC INVESTMENT and Playmates Toys 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 Playmates Toys Limited 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 has no effect on the direction of Playmates Toys i.e., Playmates Toys and AGNC INVESTMENT go up and down completely randomly.

Pair Corralation between Playmates Toys and AGNC INVESTMENT

Assuming the 90 days horizon Playmates Toys Limited is expected to generate 11.05 times more return on investment than AGNC INVESTMENT. However, Playmates Toys is 11.05 times more volatile than AGNC INVESTMENT. It trades about 0.06 of its potential returns per unit of risk. AGNC INVESTMENT is currently generating about 0.12 per unit of risk. If you would invest  6.90  in Playmates Toys Limited on December 22, 2024 and sell it today you would lose (0.20) from holding Playmates Toys Limited or give up 2.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Playmates Toys Limited  vs.  AGNC INVESTMENT

Playmates Toys

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Playmates Toys Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Playmates Toys reported solid returns over the last few months and may actually be approaching a breakup point.

AGNC INVESTMENT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AGNC INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Playmates Toys and AGNC INVESTMENT

The main advantage of trading using opposite Playmates Toys and AGNC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys 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 Playmates Toys Limited and AGNC INVESTMENT 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.