Correlation Between Dynex Capital and AvalonBay Communities
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and AvalonBay Communities 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 Dynex Capital and AvalonBay Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and AvalonBay Communities, you can compare the effects of market volatilities on Dynex Capital and AvalonBay Communities 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 Dynex Capital with a short position of AvalonBay Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and AvalonBay Communities.
Diversification Opportunities for Dynex Capital and AvalonBay Communities
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dynex and AvalonBay is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and AvalonBay Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvalonBay Communities and Dynex Capital 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 Dynex Capital are associated (or correlated) with AvalonBay Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvalonBay Communities has no effect on the direction of Dynex Capital i.e., Dynex Capital and AvalonBay Communities go up and down completely randomly.
Pair Corralation between Dynex Capital and AvalonBay Communities
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 1.26 times more return on investment than AvalonBay Communities. However, Dynex Capital is 1.26 times more volatile than AvalonBay Communities. It trades about 0.02 of its potential returns per unit of risk. AvalonBay Communities is currently generating about 0.03 per unit of risk. If you would invest 1,201 in Dynex Capital on December 29, 2023 and sell it today you would earn a total of 44.00 from holding Dynex Capital or generate 3.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dynex Capital vs. AvalonBay Communities
Performance |
Timeline |
Dynex Capital |
AvalonBay Communities |
Dynex Capital and AvalonBay Communities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dynex Capital and AvalonBay Communities
The main advantage of trading using opposite Dynex Capital and AvalonBay Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, AvalonBay Communities 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 AvalonBay Communities will offset losses from the drop in AvalonBay Communities' long position.Dynex Capital vs. Nocturne Acquisition Corp | Dynex Capital vs. Mountain Crest Acquisition | Dynex Capital vs. Visa Class A | Dynex Capital vs. Monterey Capital Acquisition |
AvalonBay Communities vs. Minerals Technologies | AvalonBay Communities vs. Olympic Steel | AvalonBay Communities vs. Alvotech | AvalonBay Communities vs. Repligen |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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