Correlation Between AGNC Investment and Ladder Capital

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

Diversification Opportunities for AGNC Investment and Ladder Capital

0.53

Correlation Coefficient

AGNC Investment  Ladder Capital

Very weak diversification

The 3 months correlation between AGNC and Ladder is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and Ladder Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladder Capital Corp 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 Ladder Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladder Capital Corp has no effect on the direction of AGNC Investment i.e., AGNC Investment and Ladder Capital go up and down completely randomly.

Pair Corralation between AGNC Investment and Ladder Capital

Assuming the 90 days horizon AGNC Investment is expected to generate 1.18 times less return on investment than Ladder Capital. But when comparing it to its historical volatility, AGNC Investment Corp is 3.0 times less risky than Ladder Capital. It trades about 0.18 of its potential returns per unit of risk. Ladder Capital Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,103  in Ladder Capital Corp on December 28, 2024 and sell it today you would earn a total of  52.00  from holding Ladder Capital Corp or generate 4.71% return on investment over 90 days.

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

AGNC Investment Corp  vs.  Ladder Capital Corp

AGNC Investment Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 14 (%) 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.

Ladder Capital Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ladder Capital Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Ladder Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AGNC Investment and Ladder Capital

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

The idea behind AGNC Investment Corp and Ladder Capital Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..