Correlation Between Dynex Capital and Runway Growth
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Runway Growth 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 Runway Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Runway Growth Finance, you can compare the effects of market volatilities on Dynex Capital and Runway Growth 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 Runway Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Runway Growth.
Diversification Opportunities for Dynex Capital and Runway Growth
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynex and Runway is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Runway Growth Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runway Growth Finance 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 Runway Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runway Growth Finance has no effect on the direction of Dynex Capital i.e., Dynex Capital and Runway Growth go up and down completely randomly.
Pair Corralation between Dynex Capital and Runway Growth
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.91 times more return on investment than Runway Growth. However, Dynex Capital is 1.1 times less risky than Runway Growth. It trades about 0.04 of its potential returns per unit of risk. Runway Growth Finance is currently generating about 0.03 per unit of risk. If you would invest 995.00 in Dynex Capital on September 20, 2024 and sell it today you would earn a total of 262.00 from holding Dynex Capital or generate 26.33% 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. Runway Growth Finance
Performance |
Timeline |
Dynex Capital |
Runway Growth Finance |
Dynex Capital and Runway Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dynex Capital and Runway Growth
The main advantage of trading using opposite Dynex Capital and Runway Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Runway Growth 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 Runway Growth will offset losses from the drop in Runway Growth's long position.The idea behind Dynex Capital and Runway Growth Finance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Runway Growth vs. Barings BDC | Runway Growth vs. OneMain Holdings | Runway Growth vs. Navient Corp | Runway Growth vs. Federal Agricultural Mortgage |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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