Correlation Between Nexpoint Real and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both Nexpoint Real and Pace Municipal 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 Pace Municipal 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 Pace Municipal Fixed, you can compare the effects of market volatilities on Nexpoint Real and Pace Municipal 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 Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Real and Pace Municipal.
Diversification Opportunities for Nexpoint Real and Pace Municipal
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nexpoint and Pace is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed 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 Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Pace Municipal go up and down completely randomly.
Pair Corralation between Nexpoint Real and Pace Municipal
Assuming the 90 days horizon Nexpoint Real Estate is expected to generate 1.16 times more return on investment than Pace Municipal. However, Nexpoint Real is 1.16 times more volatile than Pace Municipal Fixed. It trades about -0.06 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about -0.11 per unit of risk. If you would invest 1,628 in Nexpoint Real Estate on October 30, 2024 and sell it today you would lose (10.00) from holding Nexpoint Real Estate or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexpoint Real Estate vs. Pace Municipal Fixed
Performance |
| Timeline |
| Nexpoint Real Estate |
| Pace Municipal Fixed |
Nexpoint Real and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexpoint Real and Pace Municipal
The main advantage of trading using opposite Nexpoint Real and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Real position performs unexpectedly, Pace Municipal 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| Nexpoint Real vs. Invesco Real Estate | Nexpoint Real vs. Short Real Estate | Nexpoint Real vs. Real Estate Ultrasector | Nexpoint Real vs. Jhancock Real Estate |
| Pace Municipal vs. Pace Smallmedium Value | Pace Municipal vs. Pace International Equity | Pace Municipal vs. Pace International Equity | Pace Municipal vs. Ubs Allocation Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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