Correlation Between Dynex Capital and ACRES Commercial
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and ACRES Commercial 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 Dynex Capital and ACRES Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and ACRES Commercial Realty, you can compare the effects of market volatilities on Dynex Capital and ACRES Commercial 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 Dynex Capital with a short position of ACRES Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and ACRES Commercial.
Diversification Opportunities for Dynex Capital and ACRES Commercial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynex and ACRES is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and ACRES Commercial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACRES Commercial Realty and Dynex Capital 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 Dynex Capital are associated (or correlated) with ACRES Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACRES Commercial Realty has no effect on the direction of Dynex Capital i.e., Dynex Capital and ACRES Commercial go up and down completely randomly.
Pair Corralation between Dynex Capital and ACRES Commercial
Assuming the 90 days horizon Dynex Capital is expected to generate 0.37 times more return on investment than ACRES Commercial. However, Dynex Capital is 2.72 times less risky than ACRES Commercial. It trades about 0.06 of its potential returns per unit of risk. ACRES Commercial Realty is currently generating about -0.07 per unit of risk. If you would invest 2,532 in Dynex Capital on August 30, 2024 and sell it today you would earn a total of 10.00 from holding Dynex Capital or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. ACRES Commercial Realty
Performance |
| Timeline |
| Dynex Capital |
| ACRES Commercial Realty |
Dynex Capital and ACRES Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and ACRES Commercial
The main advantage of trading using opposite Dynex Capital and ACRES Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, ACRES Commercial 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 ACRES Commercial will offset losses from the drop in ACRES Commercial's long position.| Dynex Capital vs. AG Mortgage Investment | Dynex Capital vs. AG Mortgage Investment | Dynex Capital vs. Invesco Mortgage Capital | Dynex Capital vs. Invesco Mortgage Capital |
| ACRES Commercial vs. ACRES Commercial Realty | ACRES Commercial vs. Dynex Capital | ACRES Commercial vs. PennyMac Mortgage Investment | ACRES Commercial vs. AG Mortgage Investment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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