Correlation Between Dynex Capital and Spirit Of
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Spirit Of 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 Spirit Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Spirit Of America, you can compare the effects of market volatilities on Dynex Capital and Spirit Of 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 Spirit Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Spirit Of.
Diversification Opportunities for Dynex Capital and Spirit Of
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynex and Spirit is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Spirit Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Of America 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 Spirit Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Of America has no effect on the direction of Dynex Capital i.e., Dynex Capital and Spirit Of go up and down completely randomly.
Pair Corralation between Dynex Capital and Spirit Of
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.48 times less return on investment than Spirit Of. But when comparing it to its historical volatility, Dynex Capital is 1.19 times less risky than Spirit Of. It trades about 0.1 of its potential returns per unit of risk. Spirit Of America is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 966.00 in Spirit Of America on August 31, 2024 and sell it today you would earn a total of 27.00 from holding Spirit Of America or generate 2.8% 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. Spirit Of America
Performance |
| Timeline |
| Dynex Capital |
| Spirit Of America |
Dynex Capital and Spirit Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Spirit Of
The main advantage of trading using opposite Dynex Capital and Spirit Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Spirit Of 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 Spirit Of will offset losses from the drop in Spirit Of'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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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