Correlation Between Real Estate and Nexpoint Real
Can any of the company-specific risk be diversified away by investing in both Real Estate 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 Real Estate and Nexpoint Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Estate Fund and Nexpoint Real Estate, you can compare the effects of market volatilities on Real Estate 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 Real Estate with a short position of Nexpoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Nexpoint Real.
Diversification Opportunities for Real Estate and Nexpoint Real
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between REAL and NexPoint is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Fund 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 Real Estate 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 Real Estate Fund 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 Real Estate i.e., Real Estate and Nexpoint Real go up and down completely randomly.
Pair Corralation between Real Estate and Nexpoint Real
Assuming the 90 days horizon Real Estate Fund is expected to generate 4.69 times more return on investment than Nexpoint Real. However, Real Estate is 4.69 times more volatile than Nexpoint Real Estate. It trades about -0.01 of its potential returns per unit of risk. Nexpoint Real Estate is currently generating about -0.13 per unit of risk. If you would invest 2,652 in Real Estate Fund on October 26, 2024 and sell it today you would lose (10.00) from holding Real Estate Fund or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Estate Fund vs. Nexpoint Real Estate
Performance |
| Timeline |
| Real Estate Fund |
| Nexpoint Real Estate |
Real Estate and Nexpoint Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Estate and Nexpoint Real
The main advantage of trading using opposite Real Estate and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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.| Real Estate vs. Global Technology Portfolio | Real Estate vs. Allianzgi Technology Fund | Real Estate vs. Dreyfus Technology Growth | Real Estate vs. Pgim Jennison Technology |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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