Correlation Between BP Plc and AGNC INVESTMENT

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

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

Diversification Opportunities for BP Plc and AGNC INVESTMENT

0.56

Correlation Coefficient

BP Plc  AGNC INVESTMENT

Very weak diversification

The 3 months correlation between BPE5 and AGNC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BP plc and AGNC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGNC INVESTMENT and BP Plc 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 BP plc 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 BP Plc i.e., BP Plc and AGNC INVESTMENT go up and down completely randomly.

Pair Corralation between BP Plc and AGNC INVESTMENT

Assuming the 90 days trading horizon BP plc is expected to generate 1.32 times more return on investment than AGNC INVESTMENT. However, BP Plc is 1.32 times more volatile than AGNC INVESTMENT. It trades about 0.3 of its potential returns per unit of risk. AGNC INVESTMENT is currently generating about 0.2 per unit of risk. If you would invest  460.00  in BP plc on October 24, 2024 and sell it today you would earn a total of  43.00  from holding BP plc or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

BP plc  vs.  AGNC INVESTMENT

BP plc

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BP plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, BP Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AGNC INVESTMENT

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC INVESTMENT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AGNC INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BP Plc and AGNC INVESTMENT

The main advantage of trading using opposite BP Plc and AGNC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plc 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 BP plc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.