Correlation Between NexPoint Real and West Loop
Can any of the company-specific risk be diversified away by investing in both NexPoint Real and West Loop 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 West Loop 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 West Loop Realty, you can compare the effects of market volatilities on NexPoint Real and West Loop 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 West Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Real and West Loop.
Diversification Opportunities for NexPoint Real and West Loop
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NexPoint and West is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate and West Loop Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Loop 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 West Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Loop Realty has no effect on the direction of NexPoint Real i.e., NexPoint Real and West Loop go up and down completely randomly.
Pair Corralation between NexPoint Real and West Loop
Assuming the 90 days trading horizon NexPoint Real Estate is expected to under-perform the West Loop. In addition to that, NexPoint Real is 1.05 times more volatile than West Loop Realty. It trades about -0.06 of its total potential returns per unit of risk. West Loop Realty is currently generating about 0.27 per unit of volatility. If you would invest 1,418 in West Loop Realty on September 2, 2024 and sell it today you would earn a total of 72.00 from holding West Loop Realty or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Real Estate vs. West Loop Realty
Performance |
| Timeline |
| NexPoint Real Estate |
| West Loop Realty |
NexPoint Real and West Loop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Real and West Loop
The main advantage of trading using opposite NexPoint Real and West Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Real position performs unexpectedly, West Loop 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 West Loop will offset losses from the drop in West Loop'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 |
| West Loop vs. Guggenheim Risk Managed | West Loop vs. Guggenheim Risk Managed | West Loop vs. Real Estate Fund | West Loop vs. Simt Managed Volatility |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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