Correlation Between Dynex Capital and Technology Telecommunicatio

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

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

Diversification Opportunities for Dynex Capital and Technology Telecommunicatio

0.68

Correlation Coefficient

Dynex Capital  Technology Telecommunicatio

Poor diversification

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

Pair Corralation between Dynex Capital and Technology Telecommunicatio

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.71 times less return on investment than Technology Telecommunicatio. In addition to that, Dynex Capital is 6.37 times more volatile than Technology Telecommunication. It trades about 0.04 of its total potential returns per unit of risk. Technology Telecommunication is currently generating about 0.47 per unit of volatility. If you would invest  1,221  in Technology Telecommunication on September 24, 2024 and sell it today you would earn a total of  12.00  from holding Technology Telecommunication or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Dynex Capital  vs.  Technology Telecommunication

Dynex Capital

Risk-Adjusted Performance

2 of 100

Insignificant

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Technology Telecommunicatio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Telecommunication are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Technology Telecommunicatio is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dynex Capital and Technology Telecommunicatio

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

The idea behind Dynex Capital and Technology Telecommunication 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.