Correlation Between Global Net and NexPoint Diversified
Can any of the company-specific risk be diversified away by investing in both Global Net 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 Global Net and NexPoint Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and NexPoint Diversified Real, you can compare the effects of market volatilities on Global Net 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 Global Net with a short position of NexPoint Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and NexPoint Diversified.
Diversification Opportunities for Global Net and NexPoint Diversified
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and NexPoint is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease 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 Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and NexPoint Diversified go up and down completely randomly.
Pair Corralation between Global Net and NexPoint Diversified
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the NexPoint Diversified. In addition to that, Global Net is 1.38 times more volatile than NexPoint Diversified Real. It trades about -0.07 of its total potential returns per unit of risk. NexPoint Diversified Real is currently generating about 0.23 per unit of volatility. If you would invest 1,552 in NexPoint Diversified Real on August 23, 2024 and sell it today you would earn a total of 66.00 from holding NexPoint Diversified Real or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. NexPoint Diversified Real
Performance |
| Timeline |
| Global Net Lease |
| NexPoint Diversified Real |
Global Net and NexPoint Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and NexPoint Diversified
The main advantage of trading using opposite Global Net and NexPoint Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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.| Global Net vs. Modiv Inc | Global Net vs. Precinct Properties New | Global Net vs. Global Net Lease | Global Net vs. NexPoint Diversified Real |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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