Correlation Between Income Opportunity and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Income Opportunity 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 Income Opportunity and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Opportunity Realty and Dynex Capital, you can compare the effects of market volatilities on Income Opportunity 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 Income Opportunity with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Opportunity and Dynex Capital.
Diversification Opportunities for Income Opportunity and Dynex Capital
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Income and Dynex is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Income Opportunity Realty and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Income Opportunity 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 Income Opportunity Realty 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 Income Opportunity i.e., Income Opportunity and Dynex Capital go up and down completely randomly.
Pair Corralation between Income Opportunity and Dynex Capital
Considering the 90-day investment horizon Income Opportunity Realty is expected to generate 3.01 times more return on investment than Dynex Capital. However, Income Opportunity is 3.01 times more volatile than Dynex Capital. It trades about 0.09 of its potential returns per unit of risk. Dynex Capital is currently generating about 0.06 per unit of risk. If you would invest 1,748 in Income Opportunity Realty on September 25, 2024 and sell it today you would earn a total of 147.00 from holding Income Opportunity Realty or generate 8.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 65.08% |
Values | Daily Returns |
Income Opportunity Realty vs. Dynex Capital
Performance |
Timeline |
Income Opportunity Realty |
Dynex Capital |
Income Opportunity and Dynex Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Income Opportunity and Dynex Capital
The main advantage of trading using opposite Income Opportunity and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Opportunity 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.Income Opportunity vs. Dynex Capital | Income Opportunity vs. Orchid Island Capital | Income Opportunity vs. ARMOUR Residential REIT | Income Opportunity vs. Ready Capital Corp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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