Correlation Between Apollo Commercial and AGNC Investment

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

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

Diversification Opportunities for Apollo Commercial and AGNC Investment

0.65

Correlation Coefficient

Apollo Commercial  AGNC Investment

Poor diversification

The 3 months correlation between Apollo and AGNC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real and AGNC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC Investment Corp and Apollo Commercial 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 Apollo Commercial Real 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 Corp has no effect on the direction of Apollo Commercial i.e., Apollo Commercial and AGNC Investment go up and down completely randomly.

Pair Corralation between Apollo Commercial and AGNC Investment

Considering the 90-day investment horizon Apollo Commercial Real is expected to generate 2.12 times more return on investment than AGNC Investment. However, Apollo Commercial is 2.12 times more volatile than AGNC Investment Corp. It trades about 0.13 of its potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.08 per unit of risk. If you would invest  865.00  in Apollo Commercial Real on December 27, 2024 and sell it today you would earn a total of  114.00  from holding Apollo Commercial Real or generate 13.18% return on investment over 90 days.

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

Apollo Commercial Real  vs.  AGNC Investment Corp

Apollo Commercial Real

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Commercial Real are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Apollo Commercial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AGNC Investment Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Apollo Commercial and AGNC Investment

The main advantage of trading using opposite Apollo Commercial and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Commercial 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 Apollo Commercial Real and AGNC Investment 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.