Correlation Between BRT Realty and Nexpoint Residential
Can any of the company-specific risk be diversified away by investing in both BRT Realty and Nexpoint Residential 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 BRT Realty and Nexpoint Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRT Realty Trust and Nexpoint Residential Trust, you can compare the effects of market volatilities on BRT Realty and Nexpoint Residential 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 BRT Realty with a short position of Nexpoint Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRT Realty and Nexpoint Residential.
Diversification Opportunities for BRT Realty and Nexpoint Residential
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRT and Nexpoint is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BRT Realty Trust and Nexpoint Residential Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Residential and BRT Realty 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 BRT Realty Trust are associated (or correlated) with Nexpoint Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Residential has no effect on the direction of BRT Realty i.e., BRT Realty and Nexpoint Residential go up and down completely randomly.
Pair Corralation between BRT Realty and Nexpoint Residential
Considering the 90-day investment horizon BRT Realty Trust is expected to generate 0.91 times more return on investment than Nexpoint Residential. However, BRT Realty Trust is 1.1 times less risky than Nexpoint Residential. It trades about 0.0 of its potential returns per unit of risk. Nexpoint Residential Trust is currently generating about -0.01 per unit of risk. If you would invest 1,892 in BRT Realty Trust on October 23, 2024 and sell it today you would lose (136.00) from holding BRT Realty Trust or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRT Realty Trust vs. Nexpoint Residential Trust
Performance |
| Timeline |
| BRT Realty Trust |
| Nexpoint Residential |
BRT Realty and Nexpoint Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRT Realty and Nexpoint Residential
The main advantage of trading using opposite BRT Realty and Nexpoint Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRT Realty position performs unexpectedly, Nexpoint Residential 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 Residential will offset losses from the drop in Nexpoint Residential's long position.| BRT Realty vs. Nexpoint Residential Trust | BRT Realty vs. Centerspace | BRT Realty vs. Veris Residential | BRT Realty vs. Apartment Investment and |
| Nexpoint Residential vs. Independence Realty Trust | Nexpoint Residential vs. Community Healthcare Trust | Nexpoint Residential vs. Terreno Realty | Nexpoint Residential vs. National Storage Affiliates |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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