Correlation Between Dynex Capital and First Industrial

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

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

Diversification Opportunities for Dynex Capital and First Industrial

0.9

Correlation Coefficient

Dynex Capital  First Industrial

Almost no diversification

The 3 months correlation between Dynex and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty 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 First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of Dynex Capital i.e., Dynex Capital and First Industrial go up and down completely randomly.

Pair Corralation between Dynex Capital and First Industrial

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.77 times more return on investment than First Industrial. However, Dynex Capital is 1.29 times less risky than First Industrial. It trades about 0.17 of its potential returns per unit of risk. First Industrial Realty is currently generating about 0.09 per unit of risk. If you would invest  1,200  in Dynex Capital on December 26, 2024 and sell it today you would earn a total of  136.00  from holding Dynex Capital or generate 11.33% return on investment over 90 days.

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

Dynex Capital  vs.  First Industrial Realty

Dynex Capital

Risk-Adjusted Performance

Solid

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 unfluctuating basic indicators, Dynex Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

First Industrial Realty

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Industrial Realty are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, First Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dynex Capital and First Industrial

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

The idea behind Dynex Capital and First Industrial Realty 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.