Correlation Between Real Estate and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Real Estate and Dynex Capital 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 Real Estate and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Estate Fund and Dynex Capital, you can compare the effects of market volatilities on Real Estate and Dynex Capital 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 Real Estate with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Dynex Capital.
Diversification Opportunities for Real Estate and Dynex Capital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Real and Dynex is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Fund and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Real Estate 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 Real Estate Fund are associated (or correlated) with Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of Real Estate i.e., Real Estate and Dynex Capital go up and down completely randomly.
Pair Corralation between Real Estate and Dynex Capital
Assuming the 90 days horizon Real Estate Fund is expected to generate 1.06 times more return on investment than Dynex Capital. However, Real Estate is 1.06 times more volatile than Dynex Capital. It trades about -0.24 of its potential returns per unit of risk. Dynex Capital is currently generating about -0.54 per unit of risk. If you would invest 2,584 in Real Estate Fund on January 6, 2025 and sell it today you would lose (189.00) from holding Real Estate Fund or give up 7.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Estate Fund vs. Dynex Capital
Performance |
| Timeline |
| Real Estate Fund |
| Dynex Capital |
Real Estate and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Estate and Dynex Capital
The main advantage of trading using opposite Real Estate and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate position performs unexpectedly, Dynex Capital 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 Dynex Capital will offset losses from the drop in Dynex Capital's long position.| Real Estate vs. Nuveen Real Estate | Real Estate vs. T Rowe Price | Real Estate vs. Guggenheim Risk Managed | Real Estate vs. Guggenheim Risk Managed |
| Dynex Capital vs. Ellington Residential Mortgage | Dynex Capital vs. Ares Commercial Real | Dynex Capital vs. Cherry Hill Mortgage | Dynex Capital vs. Ready Capital Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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