Correlation Between Dynex Capital and Guggenheim Risk

Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Guggenheim Risk 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 Guggenheim Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dynex Capital and Guggenheim Risk Managed, you can compare the effects of market volatilities on Dynex Capital and Guggenheim Risk 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 Guggenheim Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Guggenheim Risk.

Diversification Opportunities for Dynex Capital and Guggenheim Risk

0.87

Correlation Coefficient

Dynex Capital  Guggenheim Risk

Very poor diversification

The 3 months correlation between Dynex and Guggenheim is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Guggenheim Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Risk Managed 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 Guggenheim Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Risk Managed has no effect on the direction of Dynex Capital i.e., Dynex Capital and Guggenheim Risk go up and down completely randomly.

Pair Corralation between Dynex Capital and Guggenheim Risk

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.83 times more return on investment than Guggenheim Risk. However, Dynex Capital is 1.2 times less risky than Guggenheim Risk. It trades about 0.18 of its potential returns per unit of risk. Guggenheim Risk Managed is currently generating about 0.01 per unit of risk. If you would invest  1,210  in Dynex Capital on August 10, 2024 and sell it today you would earn a total of  36.00  from holding Dynex Capital or generate 2.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Dynex Capital  vs.  Guggenheim Risk Managed

Dynex Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dynex Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Dynex Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Guggenheim Risk Managed

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Risk Managed are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dynex Capital and Guggenheim Risk

The main advantage of trading using opposite Dynex Capital and Guggenheim Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Guggenheim Risk 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 Guggenheim Risk will offset losses from the drop in Guggenheim Risk's long position.

The idea behind Dynex Capital and Guggenheim Risk Managed 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.