Correlation Between Dynex Capital and Mfs Variable

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

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

Diversification Opportunities for Dynex Capital and Mfs Variable

0.68

Correlation Coefficient

Dynex Capital  Mfs Variable

Poor diversification

The 3 months correlation between Dynex and Mfs is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Mfs Variable Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Variable Insurance 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 Mfs Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Variable Insurance has no effect on the direction of Dynex Capital i.e., Dynex Capital and Mfs Variable go up and down completely randomly.

Pair Corralation between Dynex Capital and Mfs Variable

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.96 times more return on investment than Mfs Variable. However, Dynex Capital is 1.05 times less risky than Mfs Variable. It trades about 0.21 of its potential returns per unit of risk. Mfs Variable Insurance is currently generating about 0.04 per unit of risk. If you would invest  1,200  in Dynex Capital on December 27, 2024 and sell it today you would earn a total of  160.00  from holding Dynex Capital or generate 13.33% return on investment over 90 days.

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

Dynex Capital  vs.  Mfs Variable Insurance

Dynex Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Dynex Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Mfs Variable Insurance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Variable Insurance are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mfs Variable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dynex Capital and Mfs Variable

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

The idea behind Dynex Capital and Mfs Variable Insurance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..