Correlation Between Dynex Capital and Hennessy Capital

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

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

Diversification Opportunities for Dynex Capital and Hennessy Capital

-0.25

Correlation Coefficient

Dynex Capital  Hennessy Capital

Very good diversification

The 3 months correlation between Dynex and Hennessy is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Hennessy Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Capital Inv 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 Hennessy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Capital Inv has no effect on the direction of Dynex Capital i.e., Dynex Capital and Hennessy Capital go up and down completely randomly.

Pair Corralation between Dynex Capital and Hennessy Capital

If you would invest  1,234  in Dynex Capital on September 22, 2024 and sell it today you would earn a total of  23.00  from holding Dynex Capital or generate 1.86% return on investment over 90 days.

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

Dynex Capital  vs.  Hennessy Capital Investment

Dynex Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 5 (%) 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.

Hennessy Capital Inv

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dynex Capital and Hennessy Capital

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

The idea behind Dynex Capital and Hennessy Capital Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.