Correlation Between AGNC Investment and Apollo Commercial

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Can any of the company-specific risk be diversified away by investing in both AGNC Investment and Apollo Commercial 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 Apollo Commercial 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 Apollo Commercial Real, you can compare the effects of market volatilities on AGNC Investment and Apollo Commercial 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 Apollo Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC Investment and Apollo Commercial.

Diversification Opportunities for AGNC Investment and Apollo Commercial

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AGNC and Apollo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and Apollo Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Commercial Real 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 Apollo Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Commercial Real has no effect on the direction of AGNC Investment i.e., AGNC Investment and Apollo Commercial go up and down completely randomly.

Pair Corralation between AGNC Investment and Apollo Commercial

Assuming the 90 days horizon AGNC Investment is expected to generate 2.93 times less return on investment than Apollo Commercial. But when comparing it to its historical volatility, AGNC Investment Corp is 3.39 times less risky than Apollo Commercial. It trades about 0.11 of its potential returns per unit of risk. Apollo Commercial Real is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  876.00  in Apollo Commercial Real on September 5, 2024 and sell it today you would earn a total of  35.00  from holding Apollo Commercial Real or generate 4.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AGNC Investment Corp  vs.  Apollo Commercial Real

 Performance 
       Timeline  
AGNC Investment Corp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, AGNC Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Apollo Commercial Real 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Apollo Commercial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

AGNC Investment and Apollo Commercial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AGNC Investment and Apollo Commercial

The main advantage of trading using opposite AGNC Investment and Apollo Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC Investment position performs unexpectedly, Apollo Commercial 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 Apollo Commercial will offset losses from the drop in Apollo Commercial's long position.
The idea behind AGNC Investment Corp and Apollo Commercial Real 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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