Correlation Between BRT Realty and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both BRT Realty 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 BRT Realty and Dynex Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRT Realty Trust and Dynex Capital, you can compare the effects of market volatilities on BRT Realty 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 BRT Realty with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRT Realty and Dynex Capital.
Diversification Opportunities for BRT Realty and Dynex Capital
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between BRT and Dynex is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BRT Realty Trust and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital and BRT Realty 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 BRT Realty Trust 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 BRT Realty i.e., BRT Realty and Dynex Capital go up and down completely randomly.
Pair Corralation between BRT Realty and Dynex Capital
Considering the 90-day investment horizon BRT Realty Trust is expected to generate 1.72 times more return on investment than Dynex Capital. However, BRT Realty is 1.72 times more volatile than Dynex Capital. It trades about 0.2 of its potential returns per unit of risk. Dynex Capital is currently generating about -0.23 per unit of risk. If you would invest 1,612 in BRT Realty Trust on January 24, 2024 and sell it today you would earn a total of 163.00 from holding BRT Realty Trust or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRT Realty Trust vs. Dynex Capital
Performance |
| Timeline |
| BRT Realty Trust |
| Dynex Capital |
BRT Realty and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRT Realty and Dynex Capital
The main advantage of trading using opposite BRT Realty and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRT Realty 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.| BRT Realty vs. Nexpoint Residential Trust | BRT Realty vs. Centerspace | BRT Realty vs. Veris Residential | BRT Realty vs. Apartment Income REIT |
| Dynex Capital vs. Ellington Residential Mortgage | Dynex Capital vs. Orchid Island Capital | Dynex Capital vs. ARMOUR Residential REIT | Dynex Capital vs. Ellington Financial LLC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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