Correlation Between Nexpoint Residential and BRT Realty
Can any of the company-specific risk be diversified away by investing in both Nexpoint Residential and BRT Realty 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 Residential and BRT Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexpoint Residential Trust and BRT Realty Trust, you can compare the effects of market volatilities on Nexpoint Residential and BRT Realty 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 Residential with a short position of BRT Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Residential and BRT Realty.
Diversification Opportunities for Nexpoint Residential and BRT Realty
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexpoint and BRT is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Residential Trust and BRT Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRT Realty Trust and Nexpoint Residential 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 Residential Trust are associated (or correlated) with BRT Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRT Realty Trust has no effect on the direction of Nexpoint Residential i.e., Nexpoint Residential and BRT Realty go up and down completely randomly.
Pair Corralation between Nexpoint Residential and BRT Realty
Given the investment horizon of 90 days Nexpoint Residential is expected to generate 2.2 times less return on investment than BRT Realty. But when comparing it to its historical volatility, Nexpoint Residential Trust is 1.38 times less risky than BRT Realty. It trades about 0.16 of its potential returns per unit of risk. BRT Realty Trust is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,709 in BRT Realty Trust on August 25, 2024 and sell it today you would earn a total of 228.00 from holding BRT Realty Trust or generate 13.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexpoint Residential Trust vs. BRT Realty Trust
Performance |
| Timeline |
| Nexpoint Residential |
| BRT Realty Trust |
Nexpoint Residential and BRT Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexpoint Residential and BRT Realty
The main advantage of trading using opposite Nexpoint Residential and BRT Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Residential position performs unexpectedly, BRT Realty 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 BRT Realty will offset losses from the drop in BRT Realty's long position.| Nexpoint Residential vs. Independence Realty Trust | Nexpoint Residential vs. Community Healthcare Trust | Nexpoint Residential vs. Terreno Realty | Nexpoint Residential vs. National Storage Affiliates |
| BRT Realty vs. Essex Property Trust | BRT Realty vs. Mid America Apartment Communities | BRT Realty vs. Camden Property Trust | BRT Realty vs. UDR Inc |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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