Correlation Between Dynex Capital and Hersha Hospitality
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Hersha Hospitality 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 Hersha Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Hersha Hospitality Trust, you can compare the effects of market volatilities on Dynex Capital and Hersha Hospitality 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 Hersha Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Hersha Hospitality.
Diversification Opportunities for Dynex Capital and Hersha Hospitality
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dynex and Hersha is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Hersha Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hersha Hospitality Trust 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 Hersha Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hersha Hospitality Trust has no effect on the direction of Dynex Capital i.e., Dynex Capital and Hersha Hospitality go up and down completely randomly.
Pair Corralation between Dynex Capital and Hersha Hospitality
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 4.44 times less return on investment than Hersha Hospitality. But when comparing it to its historical volatility, Dynex Capital is 2.74 times less risky than Hersha Hospitality. It trades about 0.05 of its potential returns per unit of risk. Hersha Hospitality Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 647.00 in Hersha Hospitality Trust on December 29, 2023 and sell it today you would earn a total of 352.00 from holding Hersha Hospitality Trust or generate 54.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 66.94% |
Values | Daily Returns |
Dynex Capital vs. Hersha Hospitality Trust
Performance |
Timeline |
Dynex Capital |
Hersha Hospitality Trust |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Dynex Capital and Hersha Hospitality Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dynex Capital and Hersha Hospitality
The main advantage of trading using opposite Dynex Capital and Hersha Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Hersha Hospitality 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 Hersha Hospitality will offset losses from the drop in Hersha Hospitality's long position.Dynex Capital vs. Visa Class A | Dynex Capital vs. Diamond Hill Investment | Dynex Capital vs. Nocturne Acquisition Corp | Dynex Capital vs. Mountain I Acquisition |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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