Correlation Between NexPoint Diversified and Global Net
Can any of the company-specific risk be diversified away by investing in both NexPoint Diversified and Global Net 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 Diversified and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexPoint Diversified Real and Global Net Lease, you can compare the effects of market volatilities on NexPoint Diversified and Global Net 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 Diversified with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Diversified and Global Net.
Diversification Opportunities for NexPoint Diversified and Global Net
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NexPoint and Global is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Diversified Real and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and NexPoint Diversified 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 Diversified Real are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of NexPoint Diversified i.e., NexPoint Diversified and Global Net go up and down completely randomly.
Pair Corralation between NexPoint Diversified and Global Net
Assuming the 90 days trading horizon NexPoint Diversified Real is expected to generate 0.61 times more return on investment than Global Net. However, NexPoint Diversified Real is 1.64 times less risky than Global Net. It trades about 0.23 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.09 per unit of risk. If you would invest 1,556 in NexPoint Diversified Real on August 27, 2024 and sell it today you would earn a total of 62.00 from holding NexPoint Diversified Real or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Diversified Real vs. Global Net Lease
Performance |
| Timeline |
| NexPoint Diversified Real |
| Global Net Lease |
NexPoint Diversified and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Diversified and Global Net
The main advantage of trading using opposite NexPoint Diversified and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Diversified position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| NexPoint Diversified vs. NexPoint Strategic Opportunities | NexPoint Diversified vs. Prospect Capital | NexPoint Diversified vs. Ready Capital | NexPoint Diversified vs. SiriusPoint |
| Global Net vs. Global Net Lease | Global Net vs. Global Medical REIT | Global Net vs. City Office REIT | Global Net vs. ARMOUR Residential REIT |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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