Correlation Between Nexpoint Real and Ares Commercial
Can any of the company-specific risk be diversified away by investing in both Nexpoint Real and Ares Commercial 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 Ares Commercial 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 Ares Commercial Real, you can compare the effects of market volatilities on Nexpoint Real and Ares Commercial 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 Ares Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Real and Ares Commercial.
Diversification Opportunities for Nexpoint Real and Ares Commercial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexpoint and Ares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Ares Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Commercial Real 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 Ares Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Commercial Real has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Ares Commercial go up and down completely randomly.
Pair Corralation between Nexpoint Real and Ares Commercial
Given the investment horizon of 90 days Nexpoint Real Estate is expected to generate 0.81 times more return on investment than Ares Commercial. However, Nexpoint Real Estate is 1.24 times less risky than Ares Commercial. It trades about 0.41 of its potential returns per unit of risk. Ares Commercial Real is currently generating about 0.23 per unit of risk. If you would invest 1,428 in Nexpoint Real Estate on August 28, 2024 and sell it today you would earn a total of 284.00 from holding Nexpoint Real Estate or generate 19.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexpoint Real Estate vs. Ares Commercial Real
Performance |
| Timeline |
| Nexpoint Real Estate |
| Ares Commercial Real |
Nexpoint Real and Ares Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexpoint Real and Ares Commercial
The main advantage of trading using opposite Nexpoint Real and Ares Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Real position performs unexpectedly, Ares Commercial 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 Ares Commercial will offset losses from the drop in Ares Commercial's long position.| Nexpoint Real vs. Ellington Residential Mortgage | Nexpoint Real vs. Ares Commercial Real | Nexpoint Real vs. TPG RE Finance | Nexpoint Real vs. Ellington Financial |
| Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex Capital |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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