Correlation Between Goldman Sachs and Dynex Capital

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

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

Diversification Opportunities for Goldman Sachs and Dynex Capital

-0.08

Correlation Coefficient

Goldman Sachs  Dynex Capital

Good diversification

The 3 months correlation between Goldman and Dynex is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Goldman Sachs 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 Goldman Sachs Group 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 Goldman Sachs i.e., Goldman Sachs and Dynex Capital go up and down completely randomly.

Pair Corralation between Goldman Sachs and Dynex Capital

Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 10.54 times less return on investment than Dynex Capital. In addition to that, Goldman Sachs is 1.9 times more volatile than Dynex Capital. It trades about 0.01 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.21 per unit of volatility. If you would invest  1,200  in Dynex Capital on December 27, 2024 and sell it today you would earn a total of  160.00  from holding Dynex Capital or generate 13.33% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Dynex Capital

Goldman Sachs Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Dynex Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 16 (%) 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.

Pair Trading with Goldman Sachs and Dynex Capital

The main advantage of trading using opposite Goldman Sachs and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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 Goldman Sachs Group 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.