Correlation Between Urban Edge and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Urban Edge 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 Urban Edge and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Edge Properties and Dynex Capital, you can compare the effects of market volatilities on Urban Edge 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 Urban Edge with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Edge and Dynex Capital.
Diversification Opportunities for Urban Edge and Dynex Capital
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Urban and Dynex is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Urban Edge 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 Urban Edge Properties 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 Urban Edge i.e., Urban Edge and Dynex Capital go up and down completely randomly.
Pair Corralation between Urban Edge and Dynex Capital
Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 1.31 times more return on investment than Dynex Capital. However, Urban Edge is 1.31 times more volatile than Dynex Capital. It trades about 0.19 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.07 per unit of risk. If you would invest 2,216 in Urban Edge Properties on August 29, 2024 and sell it today you would earn a total of 110.00 from holding Urban Edge Properties or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Urban Edge Properties vs. Dynex Capital
Performance |
| Timeline |
| Urban Edge Properties |
| Dynex Capital |
Urban Edge and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Edge and Dynex Capital
The main advantage of trading using opposite Urban Edge and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Edge 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.| Urban Edge vs. Saul Centers | Urban Edge vs. Site Centers Corp | Urban Edge vs. Kite Realty Group | Urban Edge vs. Retail Opportunity Investments |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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