Correlation Between Ready Capital and AGNC Investment

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

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

Diversification Opportunities for Ready Capital and AGNC Investment

-0.76

Correlation Coefficient

Ready Capital  AGNC Investment

Pay attention - limited upside

The 3 months correlation between Ready and AGNC is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital 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 Ready Capital 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 Ready Capital 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 Ready Capital i.e., Ready Capital and AGNC Investment go up and down completely randomly.

Pair Corralation between Ready Capital and AGNC Investment

Assuming the 90 days horizon Ready Capital is expected to generate 3.87 times more return on investment than AGNC Investment. However, Ready Capital is 3.87 times more volatile than AGNC Investment Corp. It trades about 0.02 of its potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.09 per unit of risk. If you would invest  1,584  in Ready Capital on September 28, 2024 and sell it today you would earn a total of  214.00  from holding Ready Capital or generate 13.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.7%
Values	Daily Returns

Ready Capital  vs.  AGNC Investment Corp

Ready Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ready Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Preferred Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AGNC Investment Corp

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 17 (%) 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 Ready Capital and AGNC Investment

The main advantage of trading using opposite Ready Capital and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital 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 Ready Capital 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..