Correlation Between New York and Dynex Capital

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

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

Diversification Opportunities for New York and Dynex Capital

-0.59

Correlation Coefficient

New York  Dynex Capital

Excellent diversification

The 3 months correlation between New and Dynex is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and New York 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 New York Mortgage 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 New York i.e., New York and Dynex Capital go up and down completely randomly.

Pair Corralation between New York and Dynex Capital

Given the investment horizon of 90 days New York Mortgage is expected to under-perform the Dynex Capital. In addition to that, New York is 2.77 times more volatile than Dynex Capital. It trades about -0.03 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.09 per unit of volatility. If you would invest  1,875  in Dynex Capital on September 3, 2024 and sell it today you would earn a total of  681.00  from holding Dynex Capital or generate 36.32% return on investment over 90 days.

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

New York Mortgage  vs.  Dynex Capital

New York Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dynex Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Dynex Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with New York and Dynex Capital

The main advantage of trading using opposite New York and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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 New York Mortgage 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.