Correlation Between DRI Healthcare and NexPoint Hospitality
Can any of the company-specific risk be diversified away by investing in both DRI Healthcare and NexPoint Hospitality 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 DRI Healthcare and NexPoint Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRI Healthcare Trust and NexPoint Hospitality Trust, you can compare the effects of market volatilities on DRI Healthcare and NexPoint Hospitality 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 DRI Healthcare with a short position of NexPoint Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRI Healthcare and NexPoint Hospitality.
Diversification Opportunities for DRI Healthcare and NexPoint Hospitality
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DRI and NexPoint is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding DRI Healthcare Trust and NexPoint Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Hospitality and DRI Healthcare 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 DRI Healthcare Trust are associated (or correlated) with NexPoint Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Hospitality has no effect on the direction of DRI Healthcare i.e., DRI Healthcare and NexPoint Hospitality go up and down completely randomly.
Pair Corralation between DRI Healthcare and NexPoint Hospitality
Assuming the 90 days trading horizon DRI Healthcare Trust is expected to under-perform the NexPoint Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, DRI Healthcare Trust is 144.51 times less risky than NexPoint Hospitality. The stock trades about -0.42 of its potential returns per unit of risk. The NexPoint Hospitality Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.50 in NexPoint Hospitality Trust on August 28, 2024 and sell it today you would earn a total of 28.50 from holding NexPoint Hospitality Trust or generate 1900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRI Healthcare Trust vs. NexPoint Hospitality Trust
Performance |
| Timeline |
| DRI Healthcare Trust |
| NexPoint Hospitality |
DRI Healthcare and NexPoint Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRI Healthcare and NexPoint Hospitality
The main advantage of trading using opposite DRI Healthcare and NexPoint Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRI Healthcare position performs unexpectedly, NexPoint Hospitality 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 Hospitality will offset losses from the drop in NexPoint Hospitality's long position.| DRI Healthcare vs. DRI Healthcare Trust | DRI Healthcare vs. Dexterra Group | DRI Healthcare vs. European Residential Real | DRI Healthcare vs. Dream Residential Real |
| NexPoint Hospitality vs. Gatos Silver | NexPoint Hospitality vs. Partners Value Investments | NexPoint Hospitality vs. Capstone Mining Corp | NexPoint Hospitality vs. Faction Investment Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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