Correlation Between Old Republic and AGNC Investment

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

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

Diversification Opportunities for Old Republic and AGNC Investment

-0.1

Correlation Coefficient

Old Republic  AGNC Investment

Good diversification

The 3 months correlation between Old and AGNC is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International 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 Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and AGNC Investment go up and down completely randomly.

Pair Corralation between Old Republic and AGNC Investment

Considering the 90-day investment horizon Old Republic is expected to generate 1.65 times less return on investment than AGNC Investment. In addition to that, Old Republic is 1.14 times more volatile than AGNC Investment Corp. It trades about 0.03 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.05 per unit of volatility. If you would invest  928.00  in AGNC Investment Corp on October 8, 2024 and sell it today you would earn a total of  16.00  from holding AGNC Investment Corp or generate 1.72% return on investment over 90 days.

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

Old Republic International  vs.  AGNC Investment Corp

Old Republic Interna

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the 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 Old Republic and AGNC Investment

The main advantage of trading using opposite Old Republic and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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 Old Republic International 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.