Correlation Between Diamond Hill and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Diamond Hill 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 Diamond Hill and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Investment and Dynex Capital, you can compare the effects of market volatilities on Diamond Hill 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 Diamond Hill with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Dynex Capital.
Diversification Opportunities for Diamond Hill and Dynex Capital
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diamond and Dynex is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Diamond Hill 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 Diamond Hill Investment 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 Diamond Hill i.e., Diamond Hill and Dynex Capital go up and down completely randomly.
Pair Corralation between Diamond Hill and Dynex Capital
Given the investment horizon of 90 days Diamond Hill is expected to generate 3.36 times less return on investment than Dynex Capital. In addition to that, Diamond Hill is 1.01 times more volatile than Dynex Capital. It trades about 0.01 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.03 per unit of volatility. If you would invest 1,024 in Dynex Capital on August 26, 2024 and sell it today you would earn a total of 215.00 from holding Dynex Capital or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Dynex Capital
Performance |
| Timeline |
| Diamond Hill Investment |
| Dynex Capital |
Diamond Hill and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Dynex Capital
The main advantage of trading using opposite Diamond Hill and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill 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.| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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