Correlation Between National Storage and Nexpoint Residential
Can any of the company-specific risk be diversified away by investing in both National Storage and Nexpoint Residential 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 National Storage and Nexpoint Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage Affiliates and Nexpoint Residential Trust, you can compare the effects of market volatilities on National Storage and Nexpoint Residential 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 National Storage with a short position of Nexpoint Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Nexpoint Residential.
Diversification Opportunities for National Storage and Nexpoint Residential
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and Nexpoint is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Nexpoint Residential Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Residential and National Storage 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 National Storage Affiliates are associated (or correlated) with Nexpoint Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Residential has no effect on the direction of National Storage i.e., National Storage and Nexpoint Residential go up and down completely randomly.
Pair Corralation between National Storage and Nexpoint Residential
Considering the 90-day investment horizon National Storage Affiliates is expected to generate 0.95 times more return on investment than Nexpoint Residential. However, National Storage Affiliates is 1.06 times less risky than Nexpoint Residential. It trades about -0.21 of its potential returns per unit of risk. Nexpoint Residential Trust is currently generating about -0.21 per unit of risk. If you would invest 4,311 in National Storage Affiliates on November 3, 2024 and sell it today you would lose (596.00) from holding National Storage Affiliates or give up 13.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage Affiliates vs. Nexpoint Residential Trust
Performance |
| Timeline |
| National Storage Aff |
| Nexpoint Residential |
National Storage and Nexpoint Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Nexpoint Residential
The main advantage of trading using opposite National Storage and Nexpoint Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Nexpoint Residential 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 Nexpoint Residential will offset losses from the drop in Nexpoint Residential's long position.| National Storage vs. Extra Space Storage | National Storage vs. Americold Realty Trust | National Storage vs. Public Storage | National Storage vs. Terreno Realty |
| Nexpoint Residential vs. Independence Realty Trust | Nexpoint Residential vs. Community Healthcare Trust | Nexpoint Residential vs. Terreno Realty | Nexpoint Residential vs. National Storage Affiliates |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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