Correlation Between Dynex Capital and Invesco Mortgage
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Invesco Mortgage 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 Invesco Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Invesco Mortgage Capital, you can compare the effects of market volatilities on Dynex Capital and Invesco Mortgage 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 Invesco Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Invesco Mortgage.
Diversification Opportunities for Dynex Capital and Invesco Mortgage
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dynex and Invesco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Invesco Mortgage Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Mortgage Capital 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 Invesco Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Mortgage Capital has no effect on the direction of Dynex Capital i.e., Dynex Capital and Invesco Mortgage go up and down completely randomly.
Pair Corralation between Dynex Capital and Invesco Mortgage
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.67 times more return on investment than Invesco Mortgage. However, Dynex Capital is 1.49 times less risky than Invesco Mortgage. It trades about 0.06 of its potential returns per unit of risk. Invesco Mortgage Capital is currently generating about -0.1 per unit of risk. If you would invest 1,226 in Dynex Capital on August 26, 2024 and sell it today you would earn a total of 13.00 from holding Dynex Capital or generate 1.06% 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. Invesco Mortgage Capital
Performance |
| Timeline |
| Dynex Capital |
| Invesco Mortgage Capital |
Dynex Capital and Invesco Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Invesco Mortgage
The main advantage of trading using opposite Dynex Capital and Invesco Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Invesco Mortgage 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 Invesco Mortgage will offset losses from the drop in Invesco Mortgage'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 |
| Invesco Mortgage vs. MFA Financial | Invesco Mortgage vs. Two Harbors Investments | Invesco Mortgage vs. New York Mortgage | Invesco Mortgage vs. ARMOUR Residential REIT |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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