Correlation Between Cherry Hill and AGNC Investment

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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

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cherry and AGNC is -0.62. 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 4.68 times more volatile than AGNC Investment Corp. It trades about -0.19 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.08 per unit of volatility. If you would invest  2,510  in AGNC Investment Corp on September 5, 2024 and sell it today you would earn a total of  54.00  from holding AGNC Investment Corp or generate 2.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cherry Hill Mortgage  vs.  AGNC Investment Corp

 Performance 
       Timeline  
Cherry Hill Mortgage 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
AGNC Investment Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
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. 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.

Cherry Hill and AGNC Investment Volatility Contrast

   Predicted Return Density   
       Returns  

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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