Correlation Between NexPoint Real and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both NexPoint Real and Chimera Investment 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 Real and Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexPoint Real Estate and Chimera Investment, you can compare the effects of market volatilities on NexPoint Real and Chimera Investment 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 Real with a short position of Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Real and Chimera Investment.
Diversification Opportunities for NexPoint Real and Chimera Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NexPoint and Chimera is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and NexPoint Real 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 Real Estate are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of NexPoint Real i.e., NexPoint Real and Chimera Investment go up and down completely randomly.
Pair Corralation between NexPoint Real and Chimera Investment
Assuming the 90 days trading horizon NexPoint Real Estate is expected to generate 2.74 times more return on investment than Chimera Investment. However, NexPoint Real is 2.74 times more volatile than Chimera Investment. It trades about 0.03 of its potential returns per unit of risk. Chimera Investment is currently generating about 0.02 per unit of risk. If you would invest 2,375 in NexPoint Real Estate on August 30, 2024 and sell it today you would earn a total of 15.00 from holding NexPoint Real Estate or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Real Estate vs. Chimera Investment
Performance |
| Timeline |
| NexPoint Real Estate |
| Chimera Investment |
NexPoint Real and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Real and Chimera Investment
The main advantage of trading using opposite NexPoint Real and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Real position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.| NexPoint Real vs. ACRES Commercial Realty | NexPoint Real vs. Dynex Capital | NexPoint Real vs. PennyMac Mortgage Investment | NexPoint Real vs. AG Mortgage Investment |
| Chimera Investment vs. MFA Financial | Chimera Investment vs. Two Harbors Investment | Chimera Investment vs. Invesco Mortgage Capital | Chimera Investment vs. Chimera Investment |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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