Correlation Between Broadmark Realty and Dynex Capital

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

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

Diversification Opportunities for Broadmark Realty and Dynex Capital

0.0

Correlation Coefficient

Broadmark Realty  Dynex Capital

Pay attention - limited upside

The 3 months correlation between Broadmark and Dynex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Broadmark Realty Capital and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Broadmark Realty 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 Broadmark Realty Capital 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 Broadmark Realty i.e., Broadmark Realty and Dynex Capital go up and down completely randomly.

Pair Corralation between Broadmark Realty and Dynex Capital

If you would invest  1,195  in Dynex Capital on December 28, 2024 and sell it today you would earn a total of  110.00  from holding Dynex Capital or generate 9.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Broadmark Realty Capital  vs.  Dynex Capital

Broadmark Realty Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadmark Realty Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Broadmark Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Dynex Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Dynex Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Broadmark Realty and Dynex Capital

The main advantage of trading using opposite Broadmark Realty and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadmark Realty 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 Broadmark Realty Capital 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.