Correlation Between Ladder Capital and AGNC Investment

Can any of the company-specific risk be diversified away by investing in both Ladder 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 Ladder 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 Ladder Capital Corp and AGNC Investment Corp, you can compare the effects of market volatilities on Ladder 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 Ladder Capital with a short position of AGNC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladder Capital and AGNC Investment.

Diversification Opportunities for Ladder Capital and AGNC Investment

-0.27

Correlation Coefficient

Ladder Capital  AGNC Investment

Very good diversification

The 3 months correlation between Ladder and AGNC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ladder Capital Corp 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 Ladder 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 Ladder Capital Corp 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 Ladder Capital i.e., Ladder Capital and AGNC Investment go up and down completely randomly.

Pair Corralation between Ladder Capital and AGNC Investment

Given the investment horizon of 90 days Ladder Capital Corp is expected to under-perform the AGNC Investment. In addition to that, Ladder Capital is 3.21 times more volatile than AGNC Investment Corp. It trades about -0.02 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.15 per unit of volatility. If you would invest  2,462  in AGNC Investment Corp on September 1, 2024 and sell it today you would earn a total of  84.00  from holding AGNC Investment Corp or generate 3.41% return on investment over 90 days.

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

Ladder Capital Corp  vs.  AGNC Investment Corp

Ladder Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladder Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Ladder Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

AGNC Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 12 (%) 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 Ladder Capital and AGNC Investment

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

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.