Correlation Between Globalink Investment and Dynex Capital

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

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

Diversification Opportunities for Globalink Investment and Dynex Capital

0.38

Correlation Coefficient

Globalink Investment  Dynex Capital

Weak diversification

The 3 months correlation between Globalink and Dynex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Globalink Investment Unit and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Globalink Investment 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 Globalink Investment Unit are associated (or correlated) with Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of Globalink Investment i.e., Globalink Investment and Dynex Capital go up and down completely randomly.

Pair Corralation between Globalink Investment and Dynex Capital

Assuming the 90 days horizon Globalink Investment Unit is expected to generate 1.48 times more return on investment than Dynex Capital. However, Globalink Investment is 1.48 times more volatile than Dynex Capital. It trades about 0.17 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.17 per unit of risk. If you would invest  1,159  in Globalink Investment Unit on September 18, 2024 and sell it today you would earn a total of  33.00  from holding Globalink Investment Unit or generate 2.85% return on investment over 90 days.

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

Globalink Investment Unit  vs.  Dynex Capital

Globalink Investment Unit

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globalink Investment Unit are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Globalink Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Globalink Investment and Dynex Capital

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

The idea behind Globalink Investment Unit and Dynex Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.