Correlation Between Dynex Capital and Healthcare

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

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

Diversification Opportunities for Dynex Capital and Healthcare

0.22

Correlation Coefficient

Dynex Capital  Healthcare

Modest diversification

The 3 months correlation between Dynex and Healthcare is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Healthcare AI Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare AI Acquisition 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare AI Acquisition has no effect on the direction of Dynex Capital i.e., Dynex Capital and Healthcare go up and down completely randomly.

Pair Corralation between Dynex Capital and Healthcare

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.27 times more return on investment than Healthcare. However, Dynex Capital is 3.73 times less risky than Healthcare. It trades about 0.16 of its potential returns per unit of risk. Healthcare AI Acquisition is currently generating about -0.18 per unit of risk. If you would invest  1,235  in Dynex Capital on September 20, 2024 and sell it today you would earn a total of  22.00  from holding Dynex Capital or generate 1.78% return on investment over 90 days.

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

Dynex Capital  vs.  Healthcare AI Acquisition

Dynex Capital

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Dynex Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Healthcare AI Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare AI Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Healthcare is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dynex Capital and Healthcare

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

The idea behind Dynex Capital and Healthcare AI Acquisition 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.