Correlation Between AGNC INVESTMENT and Reliance Steel

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

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

Diversification Opportunities for AGNC INVESTMENT and Reliance Steel

0.08

Correlation Coefficient

AGNC INVESTMENT  Reliance Steel

Significant diversification

The 3 months correlation between AGNC and Reliance is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum 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 Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of AGNC INVESTMENT i.e., AGNC INVESTMENT and Reliance Steel go up and down completely randomly.

Pair Corralation between AGNC INVESTMENT and Reliance Steel

Assuming the 90 days trading horizon AGNC INVESTMENT is expected to generate 0.63 times more return on investment than Reliance Steel. However, AGNC INVESTMENT is 1.59 times less risky than Reliance Steel. It trades about 0.07 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about 0.03 per unit of risk. If you would invest  773.00  in AGNC INVESTMENT on October 24, 2024 and sell it today you would earn a total of  164.00  from holding AGNC INVESTMENT or generate 21.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

AGNC INVESTMENT  vs.  Reliance Steel Aluminum

AGNC INVESTMENT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AGNC INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Reliance Steel Aluminum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Reliance Steel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AGNC INVESTMENT and Reliance Steel

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

The idea behind AGNC INVESTMENT and Reliance Steel Aluminum 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.