Correlation Between Dynex Capital and One Liberty
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and One Liberty 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 One Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and One Liberty Properties, you can compare the effects of market volatilities on Dynex Capital and One Liberty 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 One Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and One Liberty.
Diversification Opportunities for Dynex Capital and One Liberty
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynex and One is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties 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 One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of Dynex Capital i.e., Dynex Capital and One Liberty go up and down completely randomly.
Pair Corralation between Dynex Capital and One Liberty
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.58 times less return on investment than One Liberty. In addition to that, Dynex Capital is 1.03 times more volatile than One Liberty Properties. It trades about 0.04 of its total potential returns per unit of risk. One Liberty Properties is currently generating about 0.06 per unit of volatility. If you would invest 1,972 in One Liberty Properties on August 26, 2024 and sell it today you would earn a total of 906.00 from holding One Liberty Properties or generate 45.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynex Capital vs. One Liberty Properties
Performance |
| Timeline |
| Dynex Capital |
| One Liberty Properties |
Dynex Capital and One Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and One Liberty
The main advantage of trading using opposite Dynex Capital and One Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, One Liberty 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 One Liberty will offset losses from the drop in One Liberty'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 |
| One Liberty vs. Generationome Properties | One Liberty vs. Modiv Inc | One Liberty vs. Armada Hflr Pr | One Liberty vs. NexPoint Diversified Real |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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