Correlation Between Dynex Capital and Fortitude
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Fortitude 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 Fortitude into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Fortitude Group, you can compare the effects of market volatilities on Dynex Capital and Fortitude 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 Fortitude. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Fortitude.
Diversification Opportunities for Dynex Capital and Fortitude
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dynex and Fortitude is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Fortitude Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortitude Group 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 Fortitude. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortitude Group has no effect on the direction of Dynex Capital i.e., Dynex Capital and Fortitude go up and down completely randomly.
Pair Corralation between Dynex Capital and Fortitude
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 33.29 times less return on investment than Fortitude. But when comparing it to its historical volatility, Dynex Capital is 29.91 times less risky than Fortitude. It trades about 0.04 of its potential returns per unit of risk. Fortitude Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Fortitude Group on September 22, 2024 and sell it today you would earn a total of 0.00 from holding Fortitude Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. Fortitude Group
Performance |
| Timeline |
| Dynex Capital |
| Fortitude Group |
Dynex Capital and Fortitude Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Fortitude
The main advantage of trading using opposite Dynex Capital and Fortitude positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Fortitude 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 Fortitude will offset losses from the drop in Fortitude'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 |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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