Correlation Between Japan Post and AGNC INVESTMENT

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

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

Diversification Opportunities for Japan Post and AGNC INVESTMENT

0.36

Correlation Coefficient

Japan Post  AGNC INVESTMENT

Weak diversification

The 3 months correlation between Japan and AGNC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and AGNC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC INVESTMENT and Japan Post 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 Japan Post Insurance 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 Japan Post i.e., Japan Post and AGNC INVESTMENT go up and down completely randomly.

Pair Corralation between Japan Post and AGNC INVESTMENT

Assuming the 90 days trading horizon Japan Post Insurance is expected to under-perform the AGNC INVESTMENT. In addition to that, Japan Post is 1.16 times more volatile than AGNC INVESTMENT. It trades about -0.05 of its total potential returns per unit of risk. AGNC INVESTMENT is currently generating about 0.16 per unit of volatility. If you would invest  866.00  in AGNC INVESTMENT on December 5, 2024 and sell it today you would earn a total of  94.00  from holding AGNC INVESTMENT or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Japan Post Insurance  vs.  AGNC INVESTMENT

Japan Post Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Japan Post Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Japan Post is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AGNC INVESTMENT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 12 (%) 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 Japan Post and AGNC INVESTMENT

The main advantage of trading using opposite Japan Post and AGNC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post 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 Japan Post Insurance 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.