Correlation Between NexPoint Real and Granite Real
Can any of the company-specific risk be diversified away by investing in both NexPoint Real and Granite 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 NexPoint Real and Granite Real 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 Granite Real Estate, you can compare the effects of market volatilities on NexPoint Real and Granite 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 NexPoint Real with a short position of Granite Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Real and Granite Real.
Diversification Opportunities for NexPoint Real and Granite Real
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NexPoint and Granite is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate and Granite Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Real Estate 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 Granite Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Real Estate has no effect on the direction of NexPoint Real i.e., NexPoint Real and Granite Real go up and down completely randomly.
Pair Corralation between NexPoint Real and Granite Real
Assuming the 90 days trading horizon NexPoint Real Estate is expected to under-perform the Granite Real. But the preferred stock apears to be less risky and, when comparing its historical volatility, NexPoint Real Estate is 3.04 times less risky than Granite Real. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Granite Real Estate is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,274 in Granite Real Estate on August 27, 2024 and sell it today you would earn a total of 9.00 from holding Granite Real Estate or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Real Estate vs. Granite Real Estate
Performance |
| Timeline |
| NexPoint Real Estate |
| Granite Real Estate |
NexPoint Real and Granite Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Real and Granite Real
The main advantage of trading using opposite NexPoint Real and Granite Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Real position performs unexpectedly, Granite 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 Granite Real will offset losses from the drop in Granite Real's long position.The idea behind NexPoint Real Estate and Granite Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Granite Real vs. Public Storage | Granite Real vs. Public Storage | Granite Real vs. Public Storage | Granite Real vs. Public Storage |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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