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

0.54

Correlation Coefficient

Cherry Hill  AGNC Investment

Very weak diversification

The 3 months correlation between Cherry and AGNC is 0.54. 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

Given the investment horizon of 90 days Cherry Hill Mortgage is expected to under-perform the AGNC Investment. In addition to that, Cherry Hill is 1.69 times more volatile than AGNC Investment Corp. It trades about -0.18 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about -0.02 per unit of volatility. If you would invest  997.00  in AGNC Investment Corp on August 30, 2024 and sell it today you would lose (21.00) from holding AGNC Investment Corp or give up 2.11% of portfolio value over 90 days.

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

Cherry Hill Mortgage  vs.  AGNC Investment Corp

Cherry Hill Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cherry Hill Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

AGNC Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGNC Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.