Correlation Between Dynex Capital and Victory Capital

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

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

Diversification Opportunities for Dynex Capital and Victory Capital

0.5

Correlation Coefficient

Dynex Capital  Victory Capital

Very weak diversification

The 3 months correlation between Dynex and Victory is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Victory Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Capital Holdings 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 Victory Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Capital Holdings has no effect on the direction of Dynex Capital i.e., Dynex Capital and Victory Capital go up and down completely randomly.

Pair Corralation between Dynex Capital and Victory Capital

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 3.59 times less return on investment than Victory Capital. But when comparing it to its historical volatility, Dynex Capital is 1.24 times less risky than Victory Capital. It trades about 0.04 of its potential returns per unit of risk. Victory Capital Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,503  in Victory Capital Holdings on September 20, 2024 and sell it today you would earn a total of  3,756  from holding Victory Capital Holdings or generate 150.06% return on investment over 90 days.

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

Dynex Capital  vs.  Victory Capital Holdings

Dynex Capital

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dynex Capital has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Victory Capital Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Capital Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Victory Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dynex Capital and Victory Capital

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

The idea behind Dynex Capital and Victory Capital Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.