Correlation Between Rithm Property and AGNC Investment

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

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

Diversification Opportunities for Rithm Property and AGNC Investment

-0.76

Correlation Coefficient

Rithm Property  AGNC Investment

Pay attention - limited upside

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

Pair Corralation between Rithm Property and AGNC Investment

Considering the 90-day investment horizon Rithm Property is expected to generate 2.13 times less return on investment than AGNC Investment. In addition to that, Rithm Property is 9.68 times more volatile than AGNC Investment Corp. It trades about 0.01 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.23 per unit of volatility. If you would invest  2,531  in AGNC Investment Corp on September 27, 2024 and sell it today you would earn a total of  29.00  from holding AGNC Investment Corp or generate 1.15% return on investment over 90 days.

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

Rithm Property Trust  vs.  AGNC Investment Corp

Rithm Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AGNC Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 13 (%) 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 Rithm Property and AGNC Investment

The main advantage of trading using opposite Rithm Property and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Property 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 Rithm Property Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.