Correlation Between Dynex Capital and Brookfield Asset

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Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Brookfield Asset 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 Brookfield Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Brookfield Asset Management, you can compare the effects of market volatilities on Dynex Capital and Brookfield Asset 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 Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Brookfield Asset.

Diversification Opportunities for Dynex Capital and Brookfield Asset

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Dynex and Brookfield is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man 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 Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Dynex Capital i.e., Dynex Capital and Brookfield Asset go up and down completely randomly.

Pair Corralation between Dynex Capital and Brookfield Asset

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 7.67 times less return on investment than Brookfield Asset. But when comparing it to its historical volatility, Dynex Capital is 1.43 times less risky than Brookfield Asset. It trades about 0.07 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  4,194  in Brookfield Asset Management on September 7, 2024 and sell it today you would earn a total of  1,585  from holding Brookfield Asset Management or generate 37.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dynex Capital  vs.  Brookfield Asset Management

 Performance 
       Timeline  
Dynex Capital 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Dynex Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Brookfield Asset Man 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Asset Management are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Brookfield Asset displayed solid returns over the last few months and may actually be approaching a breakup point.

Dynex Capital and Brookfield Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dynex Capital and Brookfield Asset

The main advantage of trading using opposite Dynex Capital and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Brookfield Asset 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 Brookfield Asset will offset losses from the drop in Brookfield Asset's long position.
The idea behind Dynex Capital and Brookfield Asset Management 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.
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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