Correlation Between Dynex Capital and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Diamond Hill 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 Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Diamond Hill Investment, you can compare the effects of market volatilities on Dynex Capital and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Diamond Hill.
Diversification Opportunities for Dynex Capital and Diamond Hill
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dynex and Diamond is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Dynex Capital i.e., Dynex Capital and Diamond Hill go up and down completely randomly.
Pair Corralation between Dynex Capital and Diamond Hill
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 10.55 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, Dynex Capital is 2.42 times less risky than Diamond Hill. It trades about 0.06 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 15,207 in Diamond Hill Investment on August 26, 2024 and sell it today you would earn a total of 1,849 from holding Diamond Hill Investment or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. Diamond Hill Investment
Performance |
| Timeline |
| Dynex Capital |
| Diamond Hill Investment |
Dynex Capital and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Diamond Hill
The main advantage of trading using opposite Dynex Capital and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill'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 |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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