Correlation Between Nexpoint Real and Real Estate

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Can any of the company-specific risk be diversified away by investing in both Nexpoint Real and Real Estate 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 Real Estate 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 Real Estate Fund, you can compare the effects of market volatilities on Nexpoint Real and Real Estate 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 Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Real and Real Estate.

Diversification Opportunities for Nexpoint Real and Real Estate

NexpointRealDiversified AwayNexpointRealDiversified Away100%
0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Nexpoint and Real is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Real Estate go up and down completely randomly.

Pair Corralation between Nexpoint Real and Real Estate

Assuming the 90 days horizon Nexpoint Real Estate is expected to under-perform the Real Estate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nexpoint Real Estate is 3.25 times less risky than Real Estate. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Real Estate Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,232  in Real Estate Fund on November 26, 2024 and sell it today you would earn a total of  477.00  from holding Real Estate Fund or generate 21.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.99%
ValuesDaily Returns

Nexpoint Real Estate  vs.  Real Estate Fund

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -8-6-4-2024
JavaScript chart by amCharts 3.21.15NRSCX ARYEX
       Timeline  
Nexpoint Real Estate 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nexpoint Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nexpoint Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb16.0516.116.1516.216.2516.3
Real Estate Fund 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Real Estate Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Real Estate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb25.52626.52727.52828.5

Nexpoint Real and Real Estate Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.71-0.47-0.23-0.06650.0031650.07430.260.50.74 1234567
JavaScript chart by amCharts 3.21.15NRSCX ARYEX
       Returns  

Pair Trading with Nexpoint Real and Real Estate

The main advantage of trading using opposite Nexpoint Real and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Real position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.
The idea behind Nexpoint Real Estate and Real Estate Fund 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.
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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 Stocks Directory module to find actively traded stocks across global markets.

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