Correlation Between Cherry Hill and AGNC Investment

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

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

Diversification Opportunities for Cherry Hill and AGNC Investment

0.69

Correlation Coefficient

Cherry Hill  AGNC Investment

Poor diversification

The 3 months correlation between Cherry and AGNC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage 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 Cherry Hill 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 Cherry Hill Mortgage 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 Cherry Hill i.e., Cherry Hill and AGNC Investment go up and down completely randomly.

Pair Corralation between Cherry Hill and AGNC Investment

Assuming the 90 days trading horizon Cherry Hill Mortgage is expected to generate 1.15 times more return on investment than AGNC Investment. However, Cherry Hill is 1.15 times more volatile than AGNC Investment Corp. It trades about 0.09 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  2,399  in Cherry Hill Mortgage on December 29, 2024 and sell it today you would earn a total of  64.00  from holding Cherry Hill Mortgage or generate 2.67% return on investment over 90 days.

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

Cherry Hill Mortgage  vs.  AGNC Investment Corp

Cherry Hill Mortgage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cherry Hill Mortgage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Cherry Hill is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 5 (%) 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.

Pair Trading with Cherry Hill and AGNC Investment

The main advantage of trading using opposite Cherry Hill and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill 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 Cherry Hill Mortgage 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 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..