Correlation Between Dynex Capital and Burford Capital
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Burford 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 Dynex Capital and Burford Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Burford Capital, you can compare the effects of market volatilities on Dynex Capital and Burford 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 Dynex Capital with a short position of Burford Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Burford Capital.
Diversification Opportunities for Dynex Capital and Burford Capital
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dynex and Burford is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital 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 Burford Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burford Capital has no effect on the direction of Dynex Capital i.e., Dynex Capital and Burford Capital go up and down completely randomly.
Pair Corralation between Dynex Capital and Burford Capital
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.55 times more return on investment than Burford Capital. However, Dynex Capital is 1.83 times less risky than Burford Capital. It trades about -0.03 of its potential returns per unit of risk. Burford Capital is currently generating about -0.23 per unit of risk. If you would invest 1,257 in Dynex Capital on October 11, 2024 and sell it today you would lose (7.00) from holding Dynex Capital or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. Burford Capital
Performance |
| Timeline |
| Dynex Capital |
| Burford Capital |
Dynex Capital and Burford Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Burford Capital
The main advantage of trading using opposite Dynex Capital and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Burford 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 Burford Capital will offset losses from the drop in Burford Capital's long position.| Dynex Capital vs. Ellington Residential Mortgage | Dynex Capital vs. Orchid Island Capital | Dynex Capital vs. ARMOUR Residential REIT | Dynex Capital vs. Ellington Financial |
| Burford Capital vs. Franklin Templeton Limited | Burford Capital vs. Blackrock Muni Intermediate | Burford Capital vs. Munivest Fund | Burford Capital vs. Blackrock Floating Rate |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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