Correlation Between Dynex Capital and Stifel Financial

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

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

Diversification Opportunities for Dynex Capital and Stifel Financial

-0.4

Correlation Coefficient

Dynex Capital  Stifel Financial

Very good diversification

The 3 months correlation between Dynex and Stifel is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of Dynex Capital i.e., Dynex Capital and Stifel Financial go up and down completely randomly.

Pair Corralation between Dynex Capital and Stifel Financial

Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 0.47 times more return on investment than Stifel Financial. However, Dynex Capital is 2.11 times less risky than Stifel Financial. It trades about 0.0 of its potential returns per unit of risk. Stifel Financial is currently generating about -0.18 per unit of risk. If you would invest  1,217  in Dynex Capital on January 6, 2025 and sell it today you would lose (4.00) from holding Dynex Capital or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dynex Capital  vs.  Stifel Financial

Dynex Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynex Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dynex Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Stifel Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dynex Capital and Stifel Financial

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

The idea behind Dynex Capital and Stifel Financial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.