Correlation Between ACRES Commercial and NexPoint Real
Can any of the company-specific risk be diversified away by investing in both ACRES Commercial and NexPoint Real 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 ACRES Commercial and NexPoint Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACRES Commercial Realty and NexPoint Real Estate, you can compare the effects of market volatilities on ACRES Commercial and NexPoint Real 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 ACRES Commercial with a short position of NexPoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and NexPoint Real.
Diversification Opportunities for ACRES Commercial and NexPoint Real
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACRES and NexPoint is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty and NexPoint Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Real Estate and ACRES Commercial 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 ACRES Commercial Realty are associated (or correlated) with NexPoint Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Real Estate has no effect on the direction of ACRES Commercial i.e., ACRES Commercial and NexPoint Real go up and down completely randomly.
Pair Corralation between ACRES Commercial and NexPoint Real
Assuming the 90 days trading horizon ACRES Commercial Realty is expected to generate 0.85 times more return on investment than NexPoint Real. However, ACRES Commercial Realty is 1.18 times less risky than NexPoint Real. It trades about 0.0 of its potential returns per unit of risk. NexPoint Real Estate is currently generating about 0.0 per unit of risk. If you would invest 2,301 in ACRES Commercial Realty on September 12, 2024 and sell it today you would lose (1.00) from holding ACRES Commercial Realty or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACRES Commercial Realty vs. NexPoint Real Estate
Performance |
| Timeline |
| ACRES Commercial Realty |
| NexPoint Real Estate |
ACRES Commercial and NexPoint Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACRES Commercial and NexPoint Real
The main advantage of trading using opposite ACRES Commercial and NexPoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACRES Commercial position performs unexpectedly, NexPoint Real 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 NexPoint Real will offset losses from the drop in NexPoint Real's long position.| ACRES Commercial vs. ACRES Commercial Realty | ACRES Commercial vs. Dynex Capital | ACRES Commercial vs. PennyMac Mortgage Investment | ACRES Commercial vs. AG Mortgage Investment |
| NexPoint Real vs. ACRES Commercial Realty | NexPoint Real vs. Dynex Capital | NexPoint Real vs. PennyMac Mortgage Investment | NexPoint Real vs. AG Mortgage 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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