Correlation Between Dynex Capital and Simt Real

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

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

Diversification Opportunities for Dynex Capital and Simt Real

0.62

Correlation Coefficient

Dynex Capital  Simt Real

Poor diversification

The 3 months correlation between Dynex and Simt is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Simt Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Real Estate 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 Simt Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Real Estate has no effect on the direction of Dynex Capital i.e., Dynex Capital and Simt Real go up and down completely randomly.

Pair Corralation between Dynex Capital and Simt Real

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.1 times more return on investment than Simt Real. However, Dynex Capital is 1.1 times more volatile than Simt Real Estate. It trades about 0.03 of its potential returns per unit of risk. Simt Real Estate is currently generating about -0.03 per unit of risk. If you would invest  1,247  in Dynex Capital on September 14, 2024 and sell it today you would earn a total of  16.00  from holding Dynex Capital or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Dynex Capital  vs.  Simt Real Estate

Dynex Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 2 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Simt Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Simt Real 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 Simt Real

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

The idea behind Dynex Capital and Simt Real Estate 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 Global Correlations module to find global opportunities by holding instruments from different markets.