Correlation Between NexPoint Hospitality and Northstar Clean
Can any of the company-specific risk be diversified away by investing in both NexPoint Hospitality and Northstar Clean 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 NexPoint Hospitality and Northstar Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexPoint Hospitality Trust and Northstar Clean Technologies, you can compare the effects of market volatilities on NexPoint Hospitality and Northstar Clean 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 NexPoint Hospitality with a short position of Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Hospitality and Northstar Clean.
Diversification Opportunities for NexPoint Hospitality and Northstar Clean
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NexPoint and Northstar is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Hospitality Trust and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech and NexPoint Hospitality 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 NexPoint Hospitality Trust are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of NexPoint Hospitality i.e., NexPoint Hospitality and Northstar Clean go up and down completely randomly.
Pair Corralation between NexPoint Hospitality and Northstar Clean
Assuming the 90 days trading horizon NexPoint Hospitality Trust is expected to generate 53.57 times more return on investment than Northstar Clean. However, NexPoint Hospitality is 53.57 times more volatile than Northstar Clean Technologies. It trades about 0.21 of its potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.15 per unit of risk. If you would invest 1.50 in NexPoint Hospitality Trust on August 30, 2024 and sell it today you would earn a total of 29.50 from holding NexPoint Hospitality Trust or generate 1966.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Hospitality Trust vs. Northstar Clean Technologies
Performance |
| Timeline |
| NexPoint Hospitality |
| Northstar Clean Tech |
NexPoint Hospitality and Northstar Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Hospitality and Northstar Clean
The main advantage of trading using opposite NexPoint Hospitality and Northstar Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Hospitality position performs unexpectedly, Northstar Clean 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 Northstar Clean will offset losses from the drop in Northstar Clean's long position.| NexPoint Hospitality vs. Bip Investment Corp | NexPoint Hospitality vs. CNJ Capital Investments | NexPoint Hospitality vs. Diversified Royalty Corp | NexPoint Hospitality vs. Economic Investment Trust |
| Northstar Clean vs. Cielo Waste Solutions | Northstar Clean vs. CHAR Technologies | Northstar Clean vs. iShares Canadian HYBrid | Northstar Clean vs. Altagas Cum Red |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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