Correlation Between Deutsche Real and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Deutsche Real 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 Deutsche Real and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Real Estate and Dynex Capital, you can compare the effects of market volatilities on Deutsche Real 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 Deutsche Real with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Real and Dynex Capital.
Diversification Opportunities for Deutsche Real and Dynex Capital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DEUTSCHE and Dynex is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Real Estate and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Deutsche Real 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 Deutsche Real Estate 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 Deutsche Real i.e., Deutsche Real and Dynex Capital go up and down completely randomly.
Pair Corralation between Deutsche Real and Dynex Capital
Assuming the 90 days horizon Deutsche Real Estate is expected to generate 0.8 times more return on investment than Dynex Capital. However, Deutsche Real Estate is 1.25 times less risky than Dynex Capital. It trades about 0.17 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.07 per unit of risk. If you would invest 1,996 in Deutsche Real Estate on September 2, 2024 and sell it today you would earn a total of 393.00 from holding Deutsche Real Estate or generate 19.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Real Estate vs. Dynex Capital
Performance |
| Timeline |
| Deutsche Real Estate |
| Dynex Capital |
Deutsche Real and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Real and Dynex Capital
The main advantage of trading using opposite Deutsche Real and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Real 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.| Deutsche Real vs. Realty Income | Deutsche Real vs. Dynex Capital | Deutsche Real vs. First Industrial Realty | Deutsche Real vs. Healthcare Realty Trust |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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