Correlation Between AgJunction and AGNC Investment

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

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

Diversification Opportunities for AgJunction and AGNC Investment

-0.3

Correlation Coefficient

AgJunction  AGNC Investment

Very good diversification

The 3 months correlation between AgJunction and AGNC is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding AgJunction 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 AgJunction 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 AgJunction 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 AgJunction i.e., AgJunction and AGNC Investment go up and down completely randomly.

Pair Corralation between AgJunction and AGNC Investment

Considering the 90-day investment horizon AgJunction is expected to generate 316.49 times more return on investment than AGNC Investment. However, AgJunction is 316.49 times more volatile than AGNC Investment Corp. It trades about 0.12 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  351.00  in AgJunction on September 13, 2024 and sell it today you would lose (51.00) from holding AgJunction or give up 14.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

AgJunction  vs.  AGNC Investment Corp

AgJunction

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days AgJunction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady forward-looking indicators, AgJunction showed solid returns over the last few months and may actually be approaching a breakup point.

AGNC Investment Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 3 (%) 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 AgJunction and AGNC Investment

The main advantage of trading using opposite AgJunction and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AgJunction 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 AgJunction 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.