Correlation Between Carlyle and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Carlyle 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 Carlyle and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and Dynex Capital, you can compare the effects of market volatilities on Carlyle 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 Carlyle with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Dynex Capital.
Diversification Opportunities for Carlyle and Dynex Capital
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Carlyle and Dynex is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and Dynex Capital go up and down completely randomly.
Pair Corralation between Carlyle and Dynex Capital
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 3.01 times more return on investment than Dynex Capital. However, Carlyle is 3.01 times more volatile than Dynex Capital. It trades about 0.08 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.11 per unit of risk. If you would invest 5,077 in Carlyle Group on August 30, 2024 and sell it today you would earn a total of 193.00 from holding Carlyle Group or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlyle Group vs. Dynex Capital
Performance |
| Timeline |
| Carlyle Group |
| Dynex Capital |
Carlyle and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and Dynex Capital
The main advantage of trading using opposite Carlyle and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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.The idea behind Carlyle Group and Dynex Capital 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.| Dynex Capital vs. Ellington Residential Mortgage | Dynex Capital vs. Orchid Island Capital | Dynex Capital vs. ARMOUR Residential REIT | Dynex Capital vs. Ellington Financial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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