Correlation Between Ford and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Ford and Dynex 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 Ford and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Dynex Capital, you can compare the effects of market volatilities on Ford and Dynex 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 Ford with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Dynex Capital.
Diversification Opportunities for Ford and Dynex Capital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Dynex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Ford 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 Ford Motor are associated (or correlated) with Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of Ford i.e., Ford and Dynex Capital go up and down completely randomly.
Pair Corralation between Ford and Dynex Capital
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Dynex Capital. In addition to that, Ford is 2.32 times more volatile than Dynex Capital. It trades about 0.0 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.06 per unit of volatility. If you would invest 1,152 in Dynex Capital on August 23, 2024 and sell it today you would earn a total of 89.00 from holding Dynex Capital or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Dynex Capital
Performance |
| Timeline |
| Ford Motor |
| Dynex Capital |
Ford and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Dynex Capital
The main advantage of trading using opposite Ford and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Dynex 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 Dynex Capital will offset losses from the drop in Dynex Capital's long position.The idea behind Ford Motor and Dynex Capital 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.| Dynex Capital vs. Ellington Residential Mortgage | Dynex Capital vs. Orchid Island Capital | Dynex Capital vs. ARMOUR Residential REIT | Dynex Capital vs. Ellington Financial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |