Correlation Between Apple and AGNC INVESTMENT

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

By analyzing existing cross correlation between Apple Inc and AGNC INVESTMENT, you can compare the effects of market volatilities on Apple and AGNC INVESTMENT 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 Apple with a short position of AGNC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and AGNC INVESTMENT.

Diversification Opportunities for Apple and AGNC INVESTMENT

0.25

Correlation Coefficient

Apple  AGNC INVESTMENT

Modest diversification

The 3 months correlation between Apple and AGNC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AGNC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC INVESTMENT and Apple 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 Apple Inc are associated (or correlated) with AGNC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGNC INVESTMENT has no effect on the direction of Apple i.e., Apple and AGNC INVESTMENT go up and down completely randomly.

Pair Corralation between Apple and AGNC INVESTMENT

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.99 times more return on investment than AGNC INVESTMENT. However, Apple Inc is 1.01 times less risky than AGNC INVESTMENT. It trades about 0.59 of its potential returns per unit of risk. AGNC INVESTMENT is currently generating about 0.08 per unit of risk. If you would invest  21,370  in Apple Inc on September 17, 2024 and sell it today you would earn a total of  2,245  from holding Apple Inc or generate 10.51% return on investment over 90 days.

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

Apple Inc  vs.  AGNC INVESTMENT

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

AGNC INVESTMENT

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AGNC INVESTMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and AGNC INVESTMENT

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

The idea behind Apple Inc and AGNC INVESTMENT 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.