Correlation Between Dynex Capital and In Veritas

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

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

Diversification Opportunities for Dynex Capital and In Veritas

0.0

Correlation Coefficient

Dynex Capital  In Veritas

Pay attention - limited upside

The 3 months correlation between Dynex and IVME is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and In Veritas Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on In Veritas Medical 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 In Veritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of In Veritas Medical has no effect on the direction of Dynex Capital i.e., Dynex Capital and In Veritas go up and down completely randomly.

Pair Corralation between Dynex Capital and In Veritas

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 33.7 times less return on investment than In Veritas. But when comparing it to its historical volatility, Dynex Capital is 28.05 times less risky than In Veritas. It trades about 0.04 of its potential returns per unit of risk. In Veritas Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.30  in In Veritas Medical on September 22, 2024 and sell it today you would lose (0.29) from holding In Veritas Medical or give up 96.67% of portfolio value over 90 days.

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

Dynex Capital  vs.  In Veritas Medical

Dynex Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 5 (%) 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.

In Veritas Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days In Veritas Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, In Veritas is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dynex Capital and In Veritas

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

The idea behind Dynex Capital and In Veritas Medical 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.