Correlation Between Dynex Capital and MDJM

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

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

Diversification Opportunities for Dynex Capital and MDJM

-0.58

Correlation Coefficient

Dynex Capital  MDJM

Excellent diversification

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

Pair Corralation between Dynex Capital and MDJM

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.07 times more return on investment than MDJM. However, Dynex Capital is 14.14 times less risky than MDJM. It trades about 0.27 of its potential returns per unit of risk. MDJM is currently generating about 0.0 per unit of risk. If you would invest  1,214  in Dynex Capital on December 17, 2024 and sell it today you would earn a total of  208.00  from holding Dynex Capital or generate 17.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dynex Capital  vs.  MDJM

Dynex Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 21 (%) 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.

MDJM

Risk-Adjusted Performance

Weak

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, MDJM 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 MDJM

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

The idea behind Dynex Capital and MDJM 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.