Correlation Between Dynex Capital and Forestar
Can any of the company-specific risk be diversified away by investing in both Dynex Capital and Forestar 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 Forestar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynex Capital and Forestar Group, you can compare the effects of market volatilities on Dynex Capital and Forestar 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 Forestar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynex Capital and Forestar.
Diversification Opportunities for Dynex Capital and Forestar
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dynex and Forestar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dynex Capital and Forestar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forestar Group 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 Forestar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forestar Group has no effect on the direction of Dynex Capital i.e., Dynex Capital and Forestar go up and down completely randomly.
Pair Corralation between Dynex Capital and Forestar
Allowing for the 90-day total investment horizon Dynex Capital is expected to generate 4.84 times less return on investment than Forestar. But when comparing it to its historical volatility, Dynex Capital is 2.52 times less risky than Forestar. It trades about 0.12 of its potential returns per unit of risk. Forestar Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,972 in Forestar Group on June 5, 2025 and sell it today you would earn a total of 770.00 from holding Forestar Group or generate 39.05% 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. Forestar Group
Performance |
| Timeline |
| Dynex Capital |
| Forestar Group |
Dynex Capital and Forestar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynex Capital and Forestar
The main advantage of trading using opposite Dynex Capital and Forestar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynex Capital position performs unexpectedly, Forestar 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 Forestar will offset losses from the drop in Forestar's long position.| Dynex Capital vs. Ellington Financial | Dynex Capital vs. Ellington Residential Mortgage | Dynex Capital vs. Orchid Island Capital | Dynex Capital vs. ARMOUR Residential REIT |
| Forestar vs. American Realty Investors | Forestar vs. AMREP | Forestar vs. Five Point Holdings | Forestar vs. Franklin Street Properties |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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