Correlation Between Ford and NexPoint Strategic
Can any of the company-specific risk be diversified away by investing in both Ford and NexPoint Strategic 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 Ford and NexPoint Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and NexPoint Strategic Opportunities, you can compare the effects of market volatilities on Ford and NexPoint Strategic 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 Ford with a short position of NexPoint Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and NexPoint Strategic.
Diversification Opportunities for Ford and NexPoint Strategic
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and NexPoint is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and NexPoint Strategic Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Strategic and Ford 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 Ford Motor are associated (or correlated) with NexPoint Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Strategic has no effect on the direction of Ford i.e., Ford and NexPoint Strategic go up and down completely randomly.
Pair Corralation between Ford and NexPoint Strategic
Taking into account the 90-day investment horizon Ford is expected to generate 1.01 times less return on investment than NexPoint Strategic. But when comparing it to its historical volatility, Ford Motor is 1.24 times less risky than NexPoint Strategic. It trades about 0.17 of its potential returns per unit of risk. NexPoint Strategic Opportunities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 535.00 in NexPoint Strategic Opportunities on August 31, 2024 and sell it today you would earn a total of 39.00 from holding NexPoint Strategic Opportunities or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. NexPoint Strategic Opportuniti
Performance |
| Timeline |
| Ford Motor |
| NexPoint Strategic |
Ford and NexPoint Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and NexPoint Strategic
The main advantage of trading using opposite Ford and NexPoint Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, NexPoint Strategic 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 Strategic will offset losses from the drop in NexPoint Strategic's long position.The idea behind Ford Motor and NexPoint Strategic Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NexPoint Strategic vs. Modiv Inc | NexPoint Strategic vs. Gladstone Commercial Corp | NexPoint Strategic vs. CTO Realty Growth | NexPoint Strategic vs. Broadstone Net Lease |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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