Correlation Between AGNC Investment and MFA Financial
Can any of the company-specific risk be diversified away by investing in both AGNC Investment and MFA Financial 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 MFA Financial 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 MFA Financial, you can compare the effects of market volatilities on AGNC Investment and MFA Financial 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 MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC Investment and MFA Financial.
Diversification Opportunities for AGNC Investment and MFA Financial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AGNC and MFA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and MFA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial 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 MFA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFA Financial has no effect on the direction of AGNC Investment i.e., AGNC Investment and MFA Financial go up and down completely randomly.
Pair Corralation between AGNC Investment and MFA Financial
Assuming the 90 days horizon AGNC Investment is expected to generate 3.84 times less return on investment than MFA Financial. But when comparing it to its historical volatility, AGNC Investment Corp is 2.1 times less risky than MFA Financial. It trades about 0.08 of its potential returns per unit of risk. MFA Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,333 in MFA Financial on September 23, 2024 and sell it today you would earn a total of 96.00 from holding MFA Financial or generate 4.11% 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. MFA Financial
Performance |
Timeline |
AGNC Investment Corp |
MFA Financial |
AGNC Investment and MFA Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AGNC Investment and MFA Financial
The main advantage of trading using opposite AGNC Investment and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC Investment position performs unexpectedly, MFA Financial 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 MFA Financial will offset losses from the drop in MFA Financial's long position.AGNC Investment vs. Annaly Capital Management | AGNC Investment vs. Annaly Capital Management | AGNC Investment vs. AGNC Investment Corp | AGNC Investment vs. MFA Financial |
MFA Financial vs. Annaly Capital Management | MFA Financial vs. Annaly Capital Management | MFA Financial vs. AGNC Investment Corp | MFA Financial vs. AGNC Investment Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |