Correlation Between Dynex Capital and PowerUp Acquisition

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

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

Diversification Opportunities for Dynex Capital and PowerUp Acquisition

-0.29

Correlation Coefficient

Dynex Capital  PowerUp Acquisition

Very good diversification

The 3 months correlation between Dynex and PowerUp is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and PowerUp Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerUp Acquisition Corp 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 PowerUp Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerUp Acquisition Corp has no effect on the direction of Dynex Capital i.e., Dynex Capital and PowerUp Acquisition go up and down completely randomly.

Pair Corralation between Dynex Capital and PowerUp Acquisition

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 31.51 times less return on investment than PowerUp Acquisition. But when comparing it to its historical volatility, Dynex Capital is 24.52 times less risky than PowerUp Acquisition. It trades about 0.05 of its potential returns per unit of risk. PowerUp Acquisition Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.01  in PowerUp Acquisition Corp on September 18, 2024 and sell it today you would lose (1.02) from holding PowerUp Acquisition Corp or give up 25.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Dynex Capital  vs.  PowerUp Acquisition Corp

Dynex Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 3 (%) 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.

PowerUp Acquisition Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PowerUp Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PowerUp Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dynex Capital and PowerUp Acquisition

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

The idea behind Dynex Capital and PowerUp Acquisition Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.