Correlation Between Dynex Capital and Fidelity Advisor

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

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

Diversification Opportunities for Dynex Capital and Fidelity Advisor

0.5

Correlation Coefficient

Dynex Capital  Fidelity Advisor

Very weak diversification

The 3 months correlation between Dynex and Fidelity is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Fidelity Advisor Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Real and Dynex Capital 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 Dynex Capital are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Real has no effect on the direction of Dynex Capital i.e., Dynex Capital and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Dynex Capital and Fidelity Advisor

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.96 times more return on investment than Fidelity Advisor. However, Dynex Capital is 1.05 times less risky than Fidelity Advisor. It trades about 0.17 of its potential returns per unit of risk. Fidelity Advisor Real is currently generating about 0.05 per unit of risk. If you would invest  1,195  in Dynex Capital on December 29, 2024 and sell it today you would earn a total of  133.00  from holding Dynex Capital or generate 11.13% return on investment over 90 days.

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

Dynex Capital  vs.  Fidelity Advisor Real

Dynex Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 13 (%) 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.

Fidelity Advisor Real

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Real are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dynex Capital and Fidelity Advisor

The main advantage of trading using opposite Dynex Capital and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Fidelity Advisor 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 Fidelity Advisor will offset losses from the drop in Fidelity Advisor's long position.

The idea behind Dynex Capital and Fidelity Advisor Real 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.