Correlation Between Dynex Capital and Metal Sky

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

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

Diversification Opportunities for Dynex Capital and Metal Sky

0.42

Correlation Coefficient

Dynex Capital  Metal Sky

Very weak diversification

The 3 months correlation between Dynex and Metal is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Dynex Capital i.e., Dynex Capital and Metal Sky go up and down completely randomly.

Pair Corralation between Dynex Capital and Metal Sky

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 2.51 times more return on investment than Metal Sky. However, Dynex Capital is 2.51 times more volatile than Metal Sky Star. It trades about 0.03 of its potential returns per unit of risk. Metal Sky Star is currently generating about 0.05 per unit of risk. If you would invest  1,014  in Dynex Capital on September 19, 2024 and sell it today you would earn a total of  221.00  from holding Dynex Capital or generate 21.79% 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.  Metal Sky Star

Dynex Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynex Capital has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Metal Sky Star

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metal Sky is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dynex Capital and Metal Sky

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

The idea behind Dynex Capital and Metal Sky Star 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.