Correlation Between SBI Holdings and Dynex Capital

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

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

Diversification Opportunities for SBI Holdings and Dynex Capital

0.82

Correlation Coefficient

SBI Holdings  Dynex Capital

Very poor diversification

The 3 months correlation between SBI and Dynex is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SBI Holdings and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and SBI Holdings 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 SBI Holdings 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 SBI Holdings i.e., SBI Holdings and Dynex Capital go up and down completely randomly.

Pair Corralation between SBI Holdings and Dynex Capital

Assuming the 90 days trading horizon SBI Holdings is expected to generate 1.39 times less return on investment than Dynex Capital. In addition to that, SBI Holdings is 1.69 times more volatile than Dynex Capital. It trades about 0.07 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.17 per unit of volatility. If you would invest  1,159  in Dynex Capital on December 20, 2024 and sell it today you would earn a total of  155.00  from holding Dynex Capital or generate 13.37% return on investment over 90 days.

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

SBI Holdings  vs.  Dynex Capital

SBI Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dynex Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dynex Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Holdings and Dynex Capital

The main advantage of trading using opposite SBI Holdings and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Holdings 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 SBI Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.