Correlation Between AGNC INVESTMENT and SPECTRAL MEDICAL

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

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

Diversification Opportunities for AGNC INVESTMENT and SPECTRAL MEDICAL

-0.33

Correlation Coefficient

AGNC INVESTMENT  SPECTRAL MEDICAL

Very good diversification

The 3 months correlation between AGNC and SPECTRAL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT and SPECTRAL MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRAL MEDICAL 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 SPECTRAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRAL MEDICAL has no effect on the direction of AGNC INVESTMENT i.e., AGNC INVESTMENT and SPECTRAL MEDICAL go up and down completely randomly.

Pair Corralation between AGNC INVESTMENT and SPECTRAL MEDICAL

Assuming the 90 days trading horizon AGNC INVESTMENT is expected to generate 2.47 times less return on investment than SPECTRAL MEDICAL. But when comparing it to its historical volatility, AGNC INVESTMENT is 3.11 times less risky than SPECTRAL MEDICAL. It trades about 0.05 of its potential returns per unit of risk. SPECTRAL MEDICAL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  23.00  in SPECTRAL MEDICAL on October 24, 2024 and sell it today you would earn a total of  9.00  from holding SPECTRAL MEDICAL or generate 39.13% return on investment over 90 days.

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

AGNC INVESTMENT  vs.  SPECTRAL MEDICAL

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.

SPECTRAL MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPECTRAL MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AGNC INVESTMENT and SPECTRAL MEDICAL

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

The idea behind AGNC INVESTMENT and SPECTRAL MEDICAL 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.