Correlation Between Nexpoint Residential and Mid America
Can any of the company-specific risk be diversified away by investing in both Nexpoint Residential and Mid America 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 Mid America 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 Mid America Apartment Communities, you can compare the effects of market volatilities on Nexpoint Residential and Mid America 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 Mid America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Residential and Mid America.
Diversification Opportunities for Nexpoint Residential and Mid America
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nexpoint and Mid is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Residential Trust and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment 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 Mid America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Nexpoint Residential i.e., Nexpoint Residential and Mid America go up and down completely randomly.
Pair Corralation between Nexpoint Residential and Mid America
Given the investment horizon of 90 days Nexpoint Residential Trust is expected to generate 1.29 times more return on investment than Mid America. However, Nexpoint Residential is 1.29 times more volatile than Mid America Apartment Communities. It trades about 0.11 of its potential returns per unit of risk. Mid America Apartment Communities is currently generating about 0.1 per unit of risk. If you would invest 4,436 in Nexpoint Residential Trust on August 24, 2024 and sell it today you would earn a total of 182.00 from holding Nexpoint Residential Trust or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexpoint Residential Trust vs. Mid America Apartment Communit
Performance |
| Timeline |
| Nexpoint Residential |
| Mid America Apartment |
Nexpoint Residential and Mid America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexpoint Residential and Mid America
The main advantage of trading using opposite Nexpoint Residential and Mid America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Residential position performs unexpectedly, Mid America 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 Mid America will offset losses from the drop in Mid America'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 |
| Mid America vs. AvalonBay Communities | Mid America vs. Essex Property Trust | Mid America vs. Equity Residential | Mid America 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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