Correlation Between Dynex Capital and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Annaly Capital 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 Annaly Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Annaly Capital Management, you can compare the effects of market volatilities on Dynex Capital and Annaly Capital 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 Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Annaly Capital.
Diversification Opportunities for Dynex Capital and Annaly Capital
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dynex and Annaly is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of Dynex Capital i.e., Dynex Capital and Annaly Capital go up and down completely randomly.
Pair Corralation between Dynex Capital and Annaly Capital
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.0 times more return on investment than Annaly Capital. However, Dynex Capital is 1.0 times less risky than Annaly Capital. It trades about 0.04 of its potential returns per unit of risk. Annaly Capital Management is currently generating about 0.03 per unit of risk. If you would invest 913.00 in Dynex Capital on January 12, 2025 and sell it today you would earn a total of 226.00 from holding Dynex Capital or generate 24.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. Annaly Capital Management
Performance |
| Timeline |
| Dynex Capital |
| Annaly Capital Management |
Dynex Capital and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Annaly Capital
The main advantage of trading using opposite Dynex Capital and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.| Dynex Capital vs. Ellington Residential Mortgage | Dynex Capital vs. Ares Commercial Real | Dynex Capital vs. Cherry Hill Mortgage | Dynex Capital vs. Ready Capital Corp |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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