Correlation Between STAG Industrial and Dynex Capital

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

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

Diversification Opportunities for STAG Industrial and Dynex Capital

-0.17

Correlation Coefficient

STAG Industrial  Dynex Capital

Good diversification

The 3 months correlation between STAG and Dynex is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and STAG Industrial 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 STAG Industrial 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 STAG Industrial i.e., STAG Industrial and Dynex Capital go up and down completely randomly.

Pair Corralation between STAG Industrial and Dynex Capital

Given the investment horizon of 90 days STAG Industrial is expected to under-perform the Dynex Capital. In addition to that, STAG Industrial is 1.29 times more volatile than Dynex Capital. It trades about -0.14 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.03 per unit of volatility. If you would invest  1,247  in Dynex Capital on September 15, 2024 and sell it today you would earn a total of  20.00  from holding Dynex Capital or generate 1.6% return on investment over 90 days.

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

STAG Industrial  vs.  Dynex Capital

STAG Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STAG Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dynex Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 2 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with STAG Industrial and Dynex Capital

The main advantage of trading using opposite STAG Industrial and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial 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 STAG Industrial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.