Correlation Between Annaly Capital and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Annaly Capital 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 Annaly Capital and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Annaly Capital Management and Dynex Capital, you can compare the effects of market volatilities on Annaly Capital 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 Annaly Capital with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and Dynex Capital.
Diversification Opportunities for Annaly Capital and Dynex Capital
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Annaly and Dynex is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Annaly 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 Annaly Capital Management 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 Annaly Capital i.e., Annaly Capital and Dynex Capital go up and down completely randomly.
Pair Corralation between Annaly Capital and Dynex Capital
Assuming the 90 days trading horizon Annaly Capital Management is expected to generate 0.69 times more return on investment than Dynex Capital. However, Annaly Capital Management is 1.44 times less risky than Dynex Capital. It trades about 0.12 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.02 per unit of risk. If you would invest 2,539 in Annaly Capital Management on August 25, 2024 and sell it today you would earn a total of 14.00 from holding Annaly Capital Management or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Annaly Capital Management vs. Dynex Capital
Performance |
| Timeline |
| Annaly Capital Management |
| Dynex Capital |
Annaly Capital and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Annaly Capital and Dynex Capital
The main advantage of trading using opposite Annaly Capital and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital 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.| Annaly Capital vs. AGNC Investment Corp | Annaly Capital vs. Annaly Capital Management | Annaly Capital vs. AGNC Investment Corp | Annaly Capital vs. New York Mortgage |
| Dynex Capital vs. ARMOUR Residential REIT | Dynex Capital vs. Annaly Capital Management | Dynex Capital vs. AGNC Investment Corp | Dynex Capital vs. Two Harbors Investment |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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