Correlation Between Element Fleet and NexPoint Hospitality
Can any of the company-specific risk be diversified away by investing in both Element Fleet 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 Element Fleet and NexPoint Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Fleet Management and NexPoint Hospitality Trust, you can compare the effects of market volatilities on Element Fleet 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 Element Fleet with a short position of NexPoint Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and NexPoint Hospitality.
Diversification Opportunities for Element Fleet and NexPoint Hospitality
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Element and NexPoint is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and NexPoint Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Hospitality and Element Fleet 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 Element Fleet Management 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 Element Fleet i.e., Element Fleet and NexPoint Hospitality go up and down completely randomly.
Pair Corralation between Element Fleet and NexPoint Hospitality
Assuming the 90 days trading horizon Element Fleet is expected to generate 1.59 times less return on investment than NexPoint Hospitality. But when comparing it to its historical volatility, Element Fleet Management is 11.49 times less risky than NexPoint Hospitality. It trades about 0.08 of its potential returns per unit of risk. NexPoint Hospitality Trust is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 144.00 in NexPoint Hospitality Trust on August 25, 2024 and sell it today you would lose (142.50) from holding NexPoint Hospitality Trust or give up 98.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Element Fleet Management vs. NexPoint Hospitality Trust
Performance |
| Timeline |
| Element Fleet Management |
| NexPoint Hospitality |
Element Fleet and NexPoint Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Fleet and NexPoint Hospitality
The main advantage of trading using opposite Element Fleet and NexPoint Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet 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.| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
| NexPoint Hospitality vs. Andlauer Healthcare Gr | NexPoint Hospitality vs. Capstone Mining Corp | NexPoint Hospitality vs. Reliq Health Technologies | NexPoint Hospitality vs. NeuPath Health |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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