Correlation Between AGNC Investment and Global Net

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

Diversification Opportunities for AGNC Investment and Global Net

-0.08

Correlation Coefficient

AGNC Investment  Global Net

Good diversification

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

Pair Corralation between AGNC Investment and Global Net

Assuming the 90 days horizon AGNC Investment Corp is expected to generate 0.28 times more return on investment than Global Net. However, AGNC Investment Corp is 3.62 times less risky than Global Net. It trades about 0.15 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.02 per unit of risk. If you would invest  2,462  in AGNC Investment Corp on September 2, 2024 and sell it today you would earn a total of  84.00  from holding AGNC Investment Corp or generate 3.41% return on investment over 90 days.

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

AGNC Investment Corp  vs.  Global Net Lease

AGNC Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 12 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

Global Net Lease

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Net is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AGNC Investment and Global Net

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

The idea behind AGNC Investment Corp and Global Net Lease 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.