Correlation Between Dynex Capital and LXP Industrial
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and LXP Industrial 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 LXP Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and LXP Industrial Trust, you can compare the effects of market volatilities on Dynex Capital and LXP Industrial 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 LXP Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and LXP Industrial.
Diversification Opportunities for Dynex Capital and LXP Industrial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dynex and LXP is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust 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 LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of Dynex Capital i.e., Dynex Capital and LXP Industrial go up and down completely randomly.
Pair Corralation between Dynex Capital and LXP Industrial
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.82 times more return on investment than LXP Industrial. However, Dynex Capital is 1.22 times less risky than LXP Industrial. It trades about 0.07 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about -0.01 per unit of risk. If you would invest 1,099 in Dynex Capital on November 9, 2024 and sell it today you would earn a total of 242.00 from holding Dynex Capital or generate 22.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. LXP Industrial Trust
Performance |
| Timeline |
| Dynex Capital |
| LXP Industrial Trust |
Dynex Capital and LXP Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and LXP Industrial
The main advantage of trading using opposite Dynex Capital and LXP Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, LXP Industrial 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 LXP Industrial will offset losses from the drop in LXP Industrial'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 |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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