Correlation Between Nexpoint Residential and National Storage
Can any of the company-specific risk be diversified away by investing in both Nexpoint Residential and National Storage 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 National Storage 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 National Storage Affiliates, you can compare the effects of market volatilities on Nexpoint Residential and National Storage 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 National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Residential and National Storage.
Diversification Opportunities for Nexpoint Residential and National Storage
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nexpoint and National is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Residential Trust and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of Nexpoint Residential i.e., Nexpoint Residential and National Storage go up and down completely randomly.
Pair Corralation between Nexpoint Residential and National Storage
Given the investment horizon of 90 days Nexpoint Residential Trust is expected to generate 1.05 times more return on investment than National Storage. However, Nexpoint Residential is 1.05 times more volatile than National Storage Affiliates. It trades about 0.02 of its potential returns per unit of risk. National Storage Affiliates is currently generating about -0.01 per unit of risk. If you would invest 4,669 in Nexpoint Residential Trust on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Nexpoint Residential Trust or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexpoint Residential Trust vs. National Storage Affiliates
Performance |
| Timeline |
| Nexpoint Residential |
| National Storage Aff |
Nexpoint Residential and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexpoint Residential and National Storage
The main advantage of trading using opposite Nexpoint Residential and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Residential position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage'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 |
| National Storage vs. Extra Space Storage | National Storage vs. Americold Realty Trust | National Storage vs. Public Storage | National Storage vs. Terreno Realty |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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