Correlation Between Nexpoint Residential and Equity Lifestyle
Can any of the company-specific risk be diversified away by investing in both Nexpoint Residential and Equity Lifestyle 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 Equity Lifestyle 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 Equity Lifestyle Properties, you can compare the effects of market volatilities on Nexpoint Residential and Equity Lifestyle 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 Equity Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Residential and Equity Lifestyle.
Diversification Opportunities for Nexpoint Residential and Equity Lifestyle
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexpoint and Equity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Residential Trust and Equity Lifestyle Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Lifestyle Pro 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 Equity Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Lifestyle Pro has no effect on the direction of Nexpoint Residential i.e., Nexpoint Residential and Equity Lifestyle go up and down completely randomly.
Pair Corralation between Nexpoint Residential and Equity Lifestyle
Given the investment horizon of 90 days Nexpoint Residential is expected to generate 1.0 times less return on investment than Equity Lifestyle. In addition to that, Nexpoint Residential is 1.5 times more volatile than Equity Lifestyle Properties. It trades about 0.02 of its total potential returns per unit of risk. Equity Lifestyle Properties is currently generating about 0.03 per unit of volatility. If you would invest 6,051 in Equity Lifestyle Properties on August 28, 2024 and sell it today you would earn a total of 1,060 from holding Equity Lifestyle Properties or generate 17.52% 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. Equity Lifestyle Properties
Performance |
| Timeline |
| Nexpoint Residential |
| Equity Lifestyle Pro |
Nexpoint Residential and Equity Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexpoint Residential and Equity Lifestyle
The main advantage of trading using opposite Nexpoint Residential and Equity Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Residential position performs unexpectedly, Equity Lifestyle 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 Equity Lifestyle will offset losses from the drop in Equity Lifestyle'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 |
| Equity Lifestyle vs. UMH Properties | Equity Lifestyle vs. UDR Inc | Equity Lifestyle vs. AvalonBay Communities | Equity Lifestyle vs. Nexpoint Residential Trust |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Global Correlations Find global opportunities by holding instruments from different markets |