Correlation Between Dynex Capital and Goldenbridge Acquisition
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Goldenbridge Acquisition 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 Goldenbridge Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Goldenbridge Acquisition Limited, you can compare the effects of market volatilities on Dynex Capital and Goldenbridge Acquisition 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 Goldenbridge Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Goldenbridge Acquisition.
Diversification Opportunities for Dynex Capital and Goldenbridge Acquisition
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynex and Goldenbridge is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Goldenbridge Acquisition Limit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldenbridge Acquisition 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 Goldenbridge Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldenbridge Acquisition has no effect on the direction of Dynex Capital i.e., Dynex Capital and Goldenbridge Acquisition go up and down completely randomly.
Pair Corralation between Dynex Capital and Goldenbridge Acquisition
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.69 times less return on investment than Goldenbridge Acquisition. But when comparing it to its historical volatility, Dynex Capital is 5.82 times less risky than Goldenbridge Acquisition. It trades about 0.21 of its potential returns per unit of risk. Goldenbridge Acquisition Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Goldenbridge Acquisition Limited on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Goldenbridge Acquisition Limited or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.0% |
| Values | Daily Returns |
Dynex Capital vs. Goldenbridge Acquisition Limit
Performance |
| Timeline |
| Dynex Capital |
| Goldenbridge Acquisition |
Dynex Capital and Goldenbridge Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Goldenbridge Acquisition
The main advantage of trading using opposite Dynex Capital and Goldenbridge Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Goldenbridge Acquisition 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 Goldenbridge Acquisition will offset losses from the drop in Goldenbridge Acquisition'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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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