Correlation Between Dynex Capital and Global Star

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

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

Diversification Opportunities for Dynex Capital and Global Star

-0.08

Correlation Coefficient

Dynex Capital  Global Star

Good diversification

The 3 months correlation between Dynex and Global is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Global Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Star Acquisition 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 Global Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Star Acquisition has no effect on the direction of Dynex Capital i.e., Dynex Capital and Global Star go up and down completely randomly.

Pair Corralation between Dynex Capital and Global Star

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.77 times more return on investment than Global Star. However, Dynex Capital is 1.3 times less risky than Global Star. It trades about 0.04 of its potential returns per unit of risk. Global Star Acquisition is currently generating about 0.02 per unit of risk. If you would invest  1,009  in Dynex Capital on September 8, 2024 and sell it today you would earn a total of  255.00  from holding Dynex Capital or generate 25.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Dynex Capital  vs.  Global Star Acquisition

Dynex Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 6 (%) 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.

Global Star Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dynex Capital and Global Star

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

The idea behind Dynex Capital and Global Star Acquisition 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.