Correlation Between Dynex Capital and CTO Realty
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and CTO Realty 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 CTO Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and CTO Realty Growth, you can compare the effects of market volatilities on Dynex Capital and CTO Realty 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 CTO Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and CTO Realty.
Diversification Opportunities for Dynex Capital and CTO Realty
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dynex and CTO is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth 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 CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of Dynex Capital i.e., Dynex Capital and CTO Realty go up and down completely randomly.
Pair Corralation between Dynex Capital and CTO Realty
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.25 times less return on investment than CTO Realty. But when comparing it to its historical volatility, Dynex Capital is 1.14 times less risky than CTO Realty. It trades about 0.03 of its potential returns per unit of risk. CTO Realty Growth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,841 in CTO Realty Growth on November 1, 2024 and sell it today you would earn a total of 424.00 from holding CTO Realty Growth or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
Dynex Capital vs. CTO Realty Growth
Performance |
| Timeline |
| Dynex Capital |
| CTO Realty Growth |
Dynex Capital and CTO Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and CTO Realty
The main advantage of trading using opposite Dynex Capital and CTO Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, CTO Realty 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 CTO Realty will offset losses from the drop in CTO Realty'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 |
| CTO Realty vs. City Office REIT | CTO Realty vs. Armada Hoffler Properties | CTO Realty vs. Digital Realty Trust | CTO Realty vs. Global Net Lease |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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