Correlation Between NYSE Composite and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Dynex Capital, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Dynex Capital.
Diversification Opportunities for NYSE Composite and Dynex Capital
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Dynex is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Dynex Capital go up and down completely randomly.
Pair Corralation between NYSE Composite and Dynex Capital
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.64 times more return on investment than Dynex Capital. However, NYSE Composite is 1.56 times less risky than Dynex Capital. It trades about 0.11 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.06 per unit of risk. If you would invest 1,800,701 in NYSE Composite on August 23, 2024 and sell it today you would earn a total of 174,212 from holding NYSE Composite or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Dynex Capital
Performance |
| Timeline |
NYSE Composite and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Dynex Capital
Pair trading matchups for Dynex Capital
Pair Trading with NYSE Composite and Dynex Capital
The main advantage of trading using opposite NYSE Composite and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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