Correlation Between NexPoint Real and Franklin BSP
Can any of the company-specific risk be diversified away by investing in both NexPoint Real and Franklin BSP 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 Franklin BSP 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 Franklin BSP Realty, you can compare the effects of market volatilities on NexPoint Real and Franklin BSP 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 Franklin BSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Real and Franklin BSP.
Diversification Opportunities for NexPoint Real and Franklin BSP
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between NexPoint and Franklin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate and Franklin BSP Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin BSP Realty 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 Franklin BSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin BSP Realty has no effect on the direction of NexPoint Real i.e., NexPoint Real and Franklin BSP go up and down completely randomly.
Pair Corralation between NexPoint Real and Franklin BSP
Assuming the 90 days trading horizon NexPoint Real Estate is expected to generate 1.05 times more return on investment than Franklin BSP. However, NexPoint Real is 1.05 times more volatile than Franklin BSP Realty. It trades about 0.1 of its potential returns per unit of risk. Franklin BSP Realty is currently generating about 0.06 per unit of risk. If you would invest 2,325 in NexPoint Real Estate on November 28, 2024 and sell it today you would earn a total of 31.00 from holding NexPoint Real Estate or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Real Estate vs. Franklin BSP Realty
Performance |
| Timeline |
| NexPoint Real Estate |
| Franklin BSP Realty |
NexPoint Real and Franklin BSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Real and Franklin BSP
The main advantage of trading using opposite NexPoint Real and Franklin BSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Real position performs unexpectedly, Franklin BSP 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 Franklin BSP will offset losses from the drop in Franklin BSP'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 |
| Franklin BSP vs. ARMOUR Residential REIT | Franklin BSP vs. PennyMac Mortgage Investment | Franklin BSP vs. Rithm Capital Corp | Franklin BSP 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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