Correlation Between Dynex Capital and Open Lending
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Open Lending 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 Open Lending into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Open Lending Corp, you can compare the effects of market volatilities on Dynex Capital and Open Lending 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 Open Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Open Lending.
Diversification Opportunities for Dynex Capital and Open Lending
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dynex and Open is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp 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 Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of Dynex Capital i.e., Dynex Capital and Open Lending go up and down completely randomly.
Pair Corralation between Dynex Capital and Open Lending
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 2.34 times less return on investment than Open Lending. But when comparing it to its historical volatility, Dynex Capital is 4.33 times less risky than Open Lending. It trades about 0.44 of its potential returns per unit of risk. Open Lending Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 546.00 in Open Lending Corp on November 9, 2024 and sell it today you would earn a total of 107.00 from holding Open Lending Corp or generate 19.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. Open Lending Corp
Performance |
| Timeline |
| Dynex Capital |
| Open Lending Corp |
Dynex Capital and Open Lending Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Open Lending
The main advantage of trading using opposite Dynex Capital and Open Lending positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Open Lending 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 Open Lending will offset losses from the drop in Open Lending'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 |
| Open Lending vs. EZCORP Inc | Open Lending vs. Orix Corp Ads | Open Lending vs. SLM Corp | Open Lending vs. Navient Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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