Correlation Between Dynex Capital and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and PennantPark Floating 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 PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and PennantPark Floating Rate, you can compare the effects of market volatilities on Dynex Capital and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and PennantPark Floating.
Diversification Opportunities for Dynex Capital and PennantPark Floating
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dynex and PennantPark is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Dynex Capital i.e., Dynex Capital and PennantPark Floating go up and down completely randomly.
Pair Corralation between Dynex Capital and PennantPark Floating
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.19 times more return on investment than PennantPark Floating. However, Dynex Capital is 1.19 times more volatile than PennantPark Floating Rate. It trades about 0.23 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.08 per unit of risk. If you would invest 1,206 in Dynex Capital on September 5, 2024 and sell it today you would earn a total of 49.00 from holding Dynex Capital or generate 4.06% 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. PennantPark Floating Rate
Performance |
Timeline |
Dynex Capital |
PennantPark Floating Rate |
Dynex Capital and PennantPark Floating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dynex Capital and PennantPark Floating
The main advantage of trading using opposite Dynex Capital and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating'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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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