Correlation Between Dynex Capital and OppFi

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

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

Diversification Opportunities for Dynex Capital and OppFi

0.58

Correlation Coefficient

Dynex Capital  OppFi

Very weak diversification

The 3 months correlation between Dynex and OppFi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and OppFi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OppFi Inc 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 OppFi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OppFi Inc has no effect on the direction of Dynex Capital i.e., Dynex Capital and OppFi go up and down completely randomly.

Pair Corralation between Dynex Capital and OppFi

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 6.58 times less return on investment than OppFi. But when comparing it to its historical volatility, Dynex Capital is 6.91 times less risky than OppFi. It trades about 0.17 of its potential returns per unit of risk. OppFi Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  691.00  in OppFi Inc on September 19, 2024 and sell it today you would earn a total of  80.00  from holding OppFi Inc or generate 11.58% 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.  OppFi Inc

Dynex Capital

Risk-Adjusted Performance

0 of 100

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.

OppFi Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dynex Capital and OppFi

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

The idea behind Dynex Capital and OppFi Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.