Correlation Between GREAT AJAX and Dynex Capital

Can any of the company-specific risk be diversified away by investing in both GREAT AJAX 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 GREAT AJAX and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GREAT AJAX P and Dynex Capital, you can compare the effects of market volatilities on GREAT AJAX 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 GREAT AJAX with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREAT AJAX and Dynex Capital.

Diversification Opportunities for GREAT AJAX and Dynex Capital

0.23

Correlation Coefficient

GREAT AJAX  Dynex Capital

Modest diversification

The 3 months correlation between GREAT and Dynex is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding GREAT AJAX P and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and GREAT AJAX 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 GREAT AJAX P 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 GREAT AJAX i.e., GREAT AJAX and Dynex Capital go up and down completely randomly.

Pair Corralation between GREAT AJAX and Dynex Capital

Assuming the 90 days horizon GREAT AJAX P is expected to under-perform the Dynex Capital. In addition to that, GREAT AJAX is 2.18 times more volatile than Dynex Capital. It trades about -0.06 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.08 per unit of volatility. If you would invest  1,191  in Dynex Capital on October 11, 2024 and sell it today you would earn a total of  17.00  from holding Dynex Capital or generate 1.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GREAT AJAX P  vs.  Dynex Capital

GREAT AJAX P

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GREAT AJAX P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GREAT AJAX may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dynex Capital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dynex Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GREAT AJAX and Dynex Capital

The main advantage of trading using opposite GREAT AJAX and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREAT AJAX 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 GREAT AJAX P 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.