Correlation Between Dynex Capital and Hersha Hospitality

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy66.94%
ValuesDaily Returns

Dynex Capital  vs.  Hersha Hospitality Trust

 Performance 
       Timeline  
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.
Hersha Hospitality Trust 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Hersha Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hersha Hospitality is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.
The idea behind Dynex Capital and Hersha Hospitality Trust 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.
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 .

Other Complementary Tools

Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
CEOs Directory
Screen CEOs from public companies around the world
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio