Correlation Between Ellington Residential and AGNC Investment

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

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

Diversification Opportunities for Ellington Residential and AGNC Investment

0.88

Correlation Coefficient

Ellington Residential  AGNC Investment

Very poor diversification

The 3 months correlation between Ellington and AGNC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ellington Residential Mortgage 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 Ellington Residential 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 Ellington Residential Mortgage 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 Ellington Residential i.e., Ellington Residential and AGNC Investment go up and down completely randomly.

Pair Corralation between Ellington Residential and AGNC Investment

Given the investment horizon of 90 days Ellington Residential is expected to generate 1.31 times less return on investment than AGNC Investment. In addition to that, Ellington Residential is 1.08 times more volatile than AGNC Investment Corp. It trades about 0.13 of its total potential returns per unit of risk. AGNC Investment Corp is currently generating about 0.19 per unit of volatility. If you would invest  854.00  in AGNC Investment Corp on May 8, 2025 and sell it today you would earn a total of  109.00  from holding AGNC Investment Corp or generate 12.76% return on investment over 90 days.

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

Ellington Residential Mortgage  vs.  AGNC Investment Corp

Ellington Residential

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ellington Residential Mortgage are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ellington Residential may actually be approaching a critical reversion point that can send shares even higher in September 2025.

AGNC Investment Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGNC Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, AGNC Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ellington Residential and AGNC Investment

The main advantage of trading using opposite Ellington Residential and AGNC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellington Residential 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 Ellington Residential Mortgage 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.