Correlation Between Equity Lifestyle and Dynex Capital

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Can any of the company-specific risk be diversified away by investing in both Equity Lifestyle 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 Equity Lifestyle and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Lifestyle Properties and Dynex Capital, you can compare the effects of market volatilities on Equity Lifestyle 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 Equity Lifestyle with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Lifestyle and Dynex Capital.

Diversification Opportunities for Equity Lifestyle and Dynex Capital

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Equity and Dynex is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Equity Lifestyle Properties and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and Equity Lifestyle 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 Equity Lifestyle Properties 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 Equity Lifestyle i.e., Equity Lifestyle and Dynex Capital go up and down completely randomly.

Pair Corralation between Equity Lifestyle and Dynex Capital

Considering the 90-day investment horizon Equity Lifestyle Properties is expected to under-perform the Dynex Capital. In addition to that, Equity Lifestyle is 1.02 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 0.12 per unit of volatility. If you would invest  1,206  in Dynex Capital on December 29, 2023 and sell it today you would earn a total of  34.00  from holding Dynex Capital or generate 2.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Equity Lifestyle Properties  vs.  Dynex Capital

 Performance 
       Timeline  
Equity Lifestyle Pro 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Equity Lifestyle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Dynex Capital 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
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 latest stock price disturbance, may contribute to short-term losses for the investors.

Equity Lifestyle and Dynex Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Equity Lifestyle and Dynex Capital

The main advantage of trading using opposite Equity Lifestyle and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Lifestyle 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 Equity Lifestyle Properties 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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