Correlation Between Dynex Capital and First Eagle

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Can any of the company-specific risk be diversified away by investing in both Dynex Capital and First Eagle 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 First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and First Eagle Alternative, you can compare the effects of market volatilities on Dynex Capital and First Eagle 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 First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and First Eagle.

Diversification Opportunities for Dynex Capital and First Eagle

DynexFirstDiversified AwayDynexFirstDiversified Away100%
0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Dynex and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and First Eagle Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Alternative 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Alternative has no effect on the direction of Dynex Capital i.e., Dynex Capital and First Eagle go up and down completely randomly.

Pair Corralation between Dynex Capital and First Eagle

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 2.6 times more return on investment than First Eagle. However, Dynex Capital is 2.6 times more volatile than First Eagle Alternative. It trades about 0.05 of its potential returns per unit of risk. First Eagle Alternative is currently generating about 0.06 per unit of risk. If you would invest  1,003  in Dynex Capital on November 27, 2024 and sell it today you would earn a total of  385.50  from holding Dynex Capital or generate 38.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Dynex Capital  vs.  First Eagle Alternative

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 051015
JavaScript chart by amCharts 3.21.15DX FCRX
       Timeline  
Dynex Capital 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Dynex Capital showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1212.51313.514
First Eagle Alternative 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Alternative are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, First Eagle is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb24.224.324.424.524.624.724.824.9

Dynex Capital and First Eagle Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.39-1.79-1.19-0.590.010.691.392.092.79 0.51.01.52.02.53.0
JavaScript chart by amCharts 3.21.15DX FCRX
       Returns  

Pair Trading with Dynex Capital and First Eagle

The main advantage of trading using opposite Dynex Capital and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.
The idea behind Dynex Capital and First Eagle Alternative pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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