Correlation Between Small Cap and Nexpoint Real
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Nexpoint Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Nexpoint Real Estate, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Nexpoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Nexpoint Real.
Diversification Opportunities for Small Cap and Nexpoint Real
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Small and Nexpoint is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity 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 Small Cap 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 Small Cap Equity 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 Small Cap i.e., Small Cap and Nexpoint Real go up and down completely randomly.
Pair Corralation between Small Cap and Nexpoint Real
Assuming the 90 days horizon Small Cap Equity is expected to under-perform the Nexpoint Real. In addition to that, Small Cap is 4.23 times more volatile than Nexpoint Real Estate. It trades about -0.21 of its total potential returns per unit of risk. Nexpoint Real Estate is currently generating about -0.29 per unit of volatility. If you would invest 1,643 in Nexpoint Real Estate on October 16, 2024 and sell it today you would lose (22.00) from holding Nexpoint Real Estate or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Nexpoint Real Estate
Performance |
| Timeline |
| Small Cap Equity |
| Nexpoint Real Estate |
Small Cap and Nexpoint Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Nexpoint Real
The main advantage of trading using opposite Small Cap and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Intermediate Government Bond | Small Cap vs. Voya Government Money | Small Cap vs. Ridgeworth Seix Government | Small Cap vs. Hsbc Government Money |
| Nexpoint Real vs. Ab Select Equity | Nexpoint Real vs. T Rowe Price | Nexpoint Real vs. Small Cap Equity | Nexpoint Real vs. T Rowe Price |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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