Correlation Between Xp and AGNC Investment

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

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

Diversification Opportunities for Xp and AGNC Investment

0.52

Correlation Coefficient

Xp  AGNC Investment

Very weak diversification

The 3 months correlation between Xp and AGNC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc 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 Xp 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 Xp Inc 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 Xp i.e., Xp and AGNC Investment go up and down completely randomly.

Pair Corralation between Xp and AGNC Investment

Allowing for the 90-day total investment horizon Xp Inc is expected to generate 3.08 times more return on investment than AGNC Investment. However, Xp is 3.08 times more volatile than AGNC Investment Corp. It trades about 0.16 of its potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.05 per unit of risk. If you would invest  1,214  in Xp Inc on December 22, 2024 and sell it today you would earn a total of  299.00  from holding Xp Inc or generate 24.63% return on investment over 90 days.

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

Xp Inc  vs.  AGNC Investment Corp

Xp Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xp Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Xp reported solid returns over the last few months and may actually be approaching a breakup point.

AGNC Investment Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Xp and AGNC Investment

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