Correlation Between AGNC Investment and DOW

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

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

Diversification Opportunities for AGNC Investment and DOW

  Correlation Coefficient
AGNC Investment Corp

Very poor diversification

The 3 months correlation between AGNC Investment and DOW is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AGNC Investment Corp and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and AGNC Investment 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 AGNC Investment Corp are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of AGNC Investment i.e. AGNC Investment and DOW go up and down completely randomly.

Pair Corralation between AGNC Investment and DOW

Given the investment horizon of 30 days, AGNC Investment Corp is expected to generate 1.52 times more return on investment than DOW. However, AGNC Investment is 1.52 times more volatile than DOW. It trades about 0.13 of its potential returns per unit of risk. DOW is currently generating about 0.12 per unit of risk. If you would invest  1,038  in AGNC Investment Corp on June 3, 2020 and sell it today you would earn a total of  234.00  from holding AGNC Investment Corp or generate 22.54% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

AGNC Investment Corp  vs.  DOW

 Performance (%) 
 Predicted Return Density 
Check out your portfolio center. Please also try Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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