Correlation Between Necessity Retail and NexPoint Strategic
Can any of the company-specific risk be diversified away by investing in both Necessity Retail and NexPoint Strategic 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 Necessity Retail and NexPoint Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Necessity Retail REIT and NexPoint Strategic Opportunities, you can compare the effects of market volatilities on Necessity Retail and NexPoint Strategic 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 Necessity Retail with a short position of NexPoint Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Necessity Retail and NexPoint Strategic.
Diversification Opportunities for Necessity Retail and NexPoint Strategic
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Necessity and NexPoint is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Necessity Retail REIT and NexPoint Strategic Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Strategic and Necessity Retail 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 Necessity Retail REIT are associated (or correlated) with NexPoint Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Strategic has no effect on the direction of Necessity Retail i.e., Necessity Retail and NexPoint Strategic go up and down completely randomly.
Pair Corralation between Necessity Retail and NexPoint Strategic
If you would invest 528.00 in NexPoint Strategic Opportunities on August 27, 2024 and sell it today you would earn a total of 12.00 from holding NexPoint Strategic Opportunities or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Necessity Retail REIT vs. NexPoint Strategic Opportuniti
Performance |
| Timeline |
| Necessity Retail REIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NexPoint Strategic |
Necessity Retail and NexPoint Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Necessity Retail and NexPoint Strategic
The main advantage of trading using opposite Necessity Retail and NexPoint Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Necessity Retail position performs unexpectedly, NexPoint Strategic 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 NexPoint Strategic will offset losses from the drop in NexPoint Strategic's long position.| Necessity Retail vs. RLJ Lodging Trust | Necessity Retail vs. PennyMac Mortgage Investment | Necessity Retail vs. Invesco Mortgage Capital | Necessity Retail vs. New York Mortgage |
| NexPoint Strategic vs. Modiv Inc | NexPoint Strategic vs. Gladstone Commercial Corp | NexPoint Strategic vs. CTO Realty Growth | NexPoint Strategic vs. Broadstone Net Lease |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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