Correlation Between Dynex Capital and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Dow Jones Industrial, you can compare the effects of market volatilities on Dynex Capital and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Dow Jones.
Diversification Opportunities for Dynex Capital and Dow Jones
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dynex and Dow is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Dynex Capital i.e., Dynex Capital and Dow Jones go up and down completely randomly.
Pair Corralation between Dynex Capital and Dow Jones
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.02 times less return on investment than Dow Jones. In addition to that, Dynex Capital is 2.1 times more volatile than Dow Jones Industrial. It trades about 0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,394,710 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,034,941 from holding Dow Jones Industrial or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. Dow Jones Industrial
Performance |
| Timeline |
Dynex Capital and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Dynex Capital
Pair trading matchups for Dynex Capital
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Dynex Capital and Dow Jones
The main advantage of trading using opposite Dynex Capital and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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