Correlation Between Essential Properties and NexPoint Diversified
Can any of the company-specific risk be diversified away by investing in both Essential Properties and NexPoint Diversified 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 Essential Properties and NexPoint Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Properties Realty and NexPoint Diversified Real, you can compare the effects of market volatilities on Essential Properties and NexPoint Diversified 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 Essential Properties with a short position of NexPoint Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Properties and NexPoint Diversified.
Diversification Opportunities for Essential Properties and NexPoint Diversified
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Essential and NexPoint is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and NexPoint Diversified Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Diversified Real and Essential Properties 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 Essential Properties Realty are associated (or correlated) with NexPoint Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Diversified Real has no effect on the direction of Essential Properties i.e., Essential Properties and NexPoint Diversified go up and down completely randomly.
Pair Corralation between Essential Properties and NexPoint Diversified
Given the investment horizon of 90 days Essential Properties Realty is expected to generate 1.39 times more return on investment than NexPoint Diversified. However, Essential Properties is 1.39 times more volatile than NexPoint Diversified Real. It trades about 0.23 of its potential returns per unit of risk. NexPoint Diversified Real is currently generating about 0.2 per unit of risk. If you would invest 3,230 in Essential Properties Realty on August 30, 2024 and sell it today you would earn a total of 201.00 from holding Essential Properties Realty or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essential Properties Realty vs. NexPoint Diversified Real
Performance |
| Timeline |
| Essential Properties |
| NexPoint Diversified Real |
Essential Properties and NexPoint Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essential Properties and NexPoint Diversified
The main advantage of trading using opposite Essential Properties and NexPoint Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties position performs unexpectedly, NexPoint Diversified 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 Diversified will offset losses from the drop in NexPoint Diversified's long position.| Essential Properties vs. Armada Hflr Pr | Essential Properties vs. CTO Realty Growth | Essential Properties vs. Brightspire Capital | Essential Properties vs. Broadstone Net Lease |
| NexPoint Diversified vs. NexPoint Strategic Opportunities | NexPoint Diversified vs. Prospect Capital | NexPoint Diversified vs. Ready Capital | NexPoint Diversified vs. SiriusPoint |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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