Correlation Between Dynex Capital and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Sterling Capital 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 Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Sterling Capital Stratton, you can compare the effects of market volatilities on Dynex Capital and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Sterling Capital.
Diversification Opportunities for Dynex Capital and Sterling Capital
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynex and Sterling is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of Dynex Capital i.e., Dynex Capital and Sterling Capital go up and down completely randomly.
Pair Corralation between Dynex Capital and Sterling Capital
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.37 times more return on investment than Sterling Capital. However, Dynex Capital is 1.37 times more volatile than Sterling Capital Stratton. It trades about 0.04 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.03 per unit of risk. If you would invest 1,021 in Dynex Capital on September 3, 2024 and sell it today you would earn a total of 234.00 from holding Dynex Capital or generate 22.92% 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. Sterling Capital Stratton
Performance |
| Timeline |
| Dynex Capital |
| Sterling Capital Stratton |
Dynex Capital and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Sterling Capital
The main advantage of trading using opposite Dynex Capital and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Dynex Capital vs. ARMOUR Residential REIT | Dynex Capital vs. Ellington Financial | Dynex Capital vs. Ares Commercial Real | Dynex Capital vs. Cherry Hill Mortgage |
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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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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