Correlation Between Dynex Capital and West Loop
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and West Loop 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 West Loop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and West Loop Realty, you can compare the effects of market volatilities on Dynex Capital and West Loop 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 West Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and West Loop.
Diversification Opportunities for Dynex Capital and West Loop
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dynex and WEST is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and West Loop Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Loop Realty 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 West Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Loop Realty has no effect on the direction of Dynex Capital i.e., Dynex Capital and West Loop go up and down completely randomly.
Pair Corralation between Dynex Capital and West Loop
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.78 times more return on investment than West Loop. However, Dynex Capital is 1.29 times less risky than West Loop. It trades about 0.44 of its potential returns per unit of risk. West Loop Realty is currently generating about 0.12 per unit of risk. If you would invest 1,235 in Dynex Capital on November 9, 2024 and sell it today you would earn a total of 106.00 from holding Dynex Capital or generate 8.58% 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. West Loop Realty
Performance |
| Timeline |
| Dynex Capital |
| West Loop Realty |
Dynex Capital and West Loop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and West Loop
The main advantage of trading using opposite Dynex Capital and West Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, West Loop 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 West Loop will offset losses from the drop in West Loop'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 |
| West Loop vs. Bbh Partner Fund | West Loop vs. Touchstone Funds Group | West Loop vs. T Rowe Price | West Loop vs. California Bond Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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