Correlation Between Dynex Capital and Ellington Financial
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Ellington Financial 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 Ellington Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Ellington Financial, you can compare the effects of market volatilities on Dynex Capital and Ellington Financial 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 Ellington Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Ellington Financial.
Diversification Opportunities for Dynex Capital and Ellington Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dynex and Ellington is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Ellington Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellington Financial 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 Ellington Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellington Financial has no effect on the direction of Dynex Capital i.e., Dynex Capital and Ellington Financial go up and down completely randomly.
Pair Corralation between Dynex Capital and Ellington Financial
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.07 times more return on investment than Ellington Financial. However, Dynex Capital is 1.07 times more volatile than Ellington Financial. It trades about 0.04 of its potential returns per unit of risk. Ellington Financial is currently generating about 0.04 per unit of risk. If you would invest 998.00 in Dynex Capital on August 26, 2024 and sell it today you would earn a total of 241.00 from holding Dynex Capital or generate 24.15% 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. Ellington Financial
Performance |
| Timeline |
| Dynex Capital |
| Ellington Financial |
Dynex Capital and Ellington Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Ellington Financial
The main advantage of trading using opposite Dynex Capital and Ellington Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Ellington Financial 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 Ellington Financial will offset losses from the drop in Ellington Financial'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 |
| Ellington Financial vs. Ellington Residential Mortgage | Ellington Financial vs. Orchid Island Capital | Ellington Financial vs. ARMOUR Residential REIT | Ellington Financial vs. Dynex Capital |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |