Correlation Between AGNC INVESTMENT and PennantPark Investment

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

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

Diversification Opportunities for AGNC INVESTMENT and PennantPark Investment

0.22

Correlation Coefficient

AGNC INVESTMENT  PennantPark Investment

Modest diversification

The 3 months correlation between AGNC and PennantPark is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and AGNC INVESTMENT 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 AGNC INVESTMENT are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of AGNC INVESTMENT i.e., AGNC INVESTMENT and PennantPark Investment go up and down completely randomly.

Pair Corralation between AGNC INVESTMENT and PennantPark Investment

Assuming the 90 days trading horizon AGNC INVESTMENT is expected to generate 0.64 times more return on investment than PennantPark Investment. However, AGNC INVESTMENT is 1.55 times less risky than PennantPark Investment. It trades about 0.11 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.01 per unit of risk. If you would invest  874.00  in AGNC INVESTMENT on December 24, 2024 and sell it today you would earn a total of  66.00  from holding AGNC INVESTMENT or generate 7.55% return on investment over 90 days.

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

AGNC INVESTMENT  vs.  PennantPark Investment

AGNC INVESTMENT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 8 (%) 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.

PennantPark Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AGNC INVESTMENT and PennantPark Investment

The main advantage of trading using opposite AGNC INVESTMENT and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC INVESTMENT position performs unexpectedly, PennantPark 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.

The idea behind AGNC INVESTMENT and PennantPark 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.