Correlation Between AGNC INVESTMENT and Commerce Bancshares

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

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

Diversification Opportunities for AGNC INVESTMENT and Commerce Bancshares

0.16

Correlation Coefficient

AGNC INVESTMENT  Commerce Bancshares

Average diversification

The 3 months correlation between AGNC and Commerce is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT and Commerce Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Bancshares 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 Commerce Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Bancshares has no effect on the direction of AGNC INVESTMENT i.e., AGNC INVESTMENT and Commerce Bancshares go up and down completely randomly.

Pair Corralation between AGNC INVESTMENT and Commerce Bancshares

Assuming the 90 days trading horizon AGNC INVESTMENT is not expected to generate positive returns. However, AGNC INVESTMENT is 1.07 times less risky than Commerce Bancshares. It waists most of its returns potential to compensate for thr risk taken. Commerce Bancshares is generating about -0.37 per unit of risk. If you would invest  900.00  in AGNC INVESTMENT on October 10, 2024 and sell it today you would lose (1.00) from holding AGNC INVESTMENT or give up 0.11% of portfolio value over 90 days.

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

AGNC INVESTMENT  vs.  Commerce Bancshares

AGNC INVESTMENT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Commerce Bancshares

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Bancshares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Commerce Bancshares reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGNC INVESTMENT and Commerce Bancshares

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

The idea behind AGNC INVESTMENT and Commerce Bancshares 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.