Correlation Between AGNC Investment and Cherry Hill

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

By analyzing existing cross correlation between AGNC Investment Corp and Cherry Hill Mortgage, you can compare the effects of market volatilities on AGNC Investment and Cherry Hill 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 Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC Investment and Cherry Hill.

Diversification Opportunities for AGNC Investment and Cherry Hill

0.54

Correlation Coefficient

AGNC Investment  Cherry Hill

Very weak diversification

The 3 months correlation between AGNC and Cherry is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and Cherry Hill Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cherry Hill Mortgage 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 Corp are associated (or correlated) with Cherry Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cherry Hill Mortgage has no effect on the direction of AGNC Investment i.e., AGNC Investment and Cherry Hill go up and down completely randomly.

Pair Corralation between AGNC Investment and Cherry Hill

Given the investment horizon of 90 days AGNC Investment Corp is expected to generate 0.38 times more return on investment than Cherry Hill. However, AGNC Investment Corp is 2.63 times less risky than Cherry Hill. It trades about 0.15 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about -0.31 per unit of risk. If you would invest  942.00  in AGNC Investment Corp on August 30, 2024 and sell it today you would earn a total of  34.00  from holding AGNC Investment Corp or generate 3.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

AGNC Investment Corp  vs.  Cherry Hill Mortgage

AGNC Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGNC Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Cherry Hill Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cherry Hill Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AGNC Investment and Cherry Hill

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

The idea behind AGNC Investment Corp and Cherry Hill Mortgage 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.