Correlation Between NexPoint Diversified and Modiv
Can any of the company-specific risk be diversified away by investing in both NexPoint Diversified and Modiv 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 Modiv 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 Modiv Inc, you can compare the effects of market volatilities on NexPoint Diversified and Modiv 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 Modiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Diversified and Modiv.
Diversification Opportunities for NexPoint Diversified and Modiv
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NexPoint and Modiv is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Diversified Real and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc 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 Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of NexPoint Diversified i.e., NexPoint Diversified and Modiv go up and down completely randomly.
Pair Corralation between NexPoint Diversified and Modiv
Assuming the 90 days trading horizon NexPoint Diversified Real is expected to generate 1.5 times more return on investment than Modiv. However, NexPoint Diversified is 1.5 times more volatile than Modiv Inc. It trades about 0.23 of its potential returns per unit of risk. Modiv Inc is currently generating about -0.01 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexPoint Diversified Real vs. Modiv Inc
Performance |
| Timeline |
| NexPoint Diversified Real |
| Modiv Inc |
NexPoint Diversified and Modiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexPoint Diversified and Modiv
The main advantage of trading using opposite NexPoint Diversified and Modiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexPoint Diversified position performs unexpectedly, Modiv 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 Modiv will offset losses from the drop in Modiv's long position.| NexPoint Diversified vs. NexPoint Strategic Opportunities | NexPoint Diversified vs. Prospect Capital | NexPoint Diversified vs. Ready Capital | NexPoint Diversified vs. SiriusPoint |
| Modiv vs. SiriusPoint | Modiv vs. RLJ Lodging Trust | Modiv vs. ARMOUR Residential REIT | Modiv vs. Sachem Capital Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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