Correlation Between Franklin BSP and Nexpoint Real
Can any of the company-specific risk be diversified away by investing in both Franklin BSP and Nexpoint Real 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 Franklin BSP and Nexpoint Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin BSP Realty and Nexpoint Real Estate, you can compare the effects of market volatilities on Franklin BSP and Nexpoint Real 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 Franklin BSP with a short position of Nexpoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin BSP and Nexpoint Real.
Diversification Opportunities for Franklin BSP and Nexpoint Real
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Nexpoint is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Franklin BSP Realty and Nexpoint Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Real Estate and Franklin BSP 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 Franklin BSP Realty are associated (or correlated) with Nexpoint Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Real Estate has no effect on the direction of Franklin BSP i.e., Franklin BSP and Nexpoint Real go up and down completely randomly.
Pair Corralation between Franklin BSP and Nexpoint Real
Given the investment horizon of 90 days Franklin BSP Realty is expected to under-perform the Nexpoint Real. But the stock apears to be less risky and, when comparing its historical volatility, Franklin BSP Realty is 1.95 times less risky than Nexpoint Real. The stock trades about -0.02 of its potential returns per unit of risk. The Nexpoint Real Estate is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,470 in Nexpoint Real Estate on August 24, 2024 and sell it today you would earn a total of 233.00 from holding Nexpoint Real Estate or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin BSP Realty vs. Nexpoint Real Estate
Performance |
| Timeline |
| Franklin BSP Realty |
| Nexpoint Real Estate |
Franklin BSP and Nexpoint Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin BSP and Nexpoint Real
The main advantage of trading using opposite Franklin BSP and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin BSP position performs unexpectedly, Nexpoint Real 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 Real will offset losses from the drop in Nexpoint Real's long position.| Franklin BSP vs. AGNC Investment Corp | Franklin BSP vs. Nexpoint Real Estate | Franklin BSP vs. Great Ajax Corp | Franklin BSP vs. Ladder Capital Corp |
| Nexpoint Real vs. Ellington Residential Mortgage | Nexpoint Real vs. Ares Commercial Real | Nexpoint Real vs. TPG RE Finance | Nexpoint Real vs. Ellington Financial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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