Correlation Between DMY Squared and AGNC Investment

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

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

Diversification Opportunities for DMY Squared and AGNC Investment

-0.39

Correlation Coefficient

DMY Squared  AGNC Investment

Very good diversification

The 3 months correlation between DMY and AGNC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology 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 DMY Squared 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 dMY Squared Technology 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 DMY Squared i.e., DMY Squared and AGNC Investment go up and down completely randomly.

Pair Corralation between DMY Squared and AGNC Investment

Given the investment horizon of 90 days dMY Squared Technology is expected to generate 0.09 times more return on investment than AGNC Investment. However, dMY Squared Technology is 10.73 times less risky than AGNC Investment. It trades about 0.17 of its potential returns per unit of risk. AGNC Investment Corp is currently generating about -0.17 per unit of risk. If you would invest  1,063  in dMY Squared Technology on February 1, 2024 and sell it today you would earn a total of  5.00  from holding dMY Squared Technology or generate 0.47% return on investment over 90 days.

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

dMY Squared Technology  vs.  AGNC Investment Corp

dMY Squared Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dMY Squared Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AGNC Investment Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days AGNC Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AGNC Investment is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DMY Squared and AGNC Investment

The main advantage of trading using opposite DMY Squared and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared 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 dMY Squared Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.