Correlation Between Sachem Capital and Nexpoint Real
Can any of the company-specific risk be diversified away by investing in both Sachem Capital and Nexpoint Real 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 Sachem Capital and Nexpoint Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sachem Capital Corp and Nexpoint Real Estate, you can compare the effects of market volatilities on Sachem Capital and Nexpoint Real 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 Sachem Capital with a short position of Nexpoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and Nexpoint Real.
Diversification Opportunities for Sachem Capital and Nexpoint Real
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sachem and Nexpoint is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Nexpoint Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Real Estate and Sachem Capital 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 Sachem Capital Corp are associated (or correlated) with Nexpoint Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Real Estate has no effect on the direction of Sachem Capital i.e., Sachem Capital and Nexpoint Real go up and down completely randomly.
Pair Corralation between Sachem Capital and Nexpoint Real
Given the investment horizon of 90 days Sachem Capital Corp is expected to under-perform the Nexpoint Real. In addition to that, Sachem Capital is 2.21 times more volatile than Nexpoint Real Estate. It trades about -0.37 of its total potential returns per unit of risk. Nexpoint Real Estate is currently generating about 0.41 per unit of volatility. If you would invest 1,428 in Nexpoint Real Estate on August 28, 2024 and sell it today you would earn a total of 284.00 from holding Nexpoint Real Estate or generate 19.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sachem Capital Corp vs. Nexpoint Real Estate
Performance |
| Timeline |
| Sachem Capital Corp |
| Nexpoint Real Estate |
Sachem Capital and Nexpoint Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sachem Capital and Nexpoint Real
The main advantage of trading using opposite Sachem Capital and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sachem Capital position performs unexpectedly, Nexpoint Real 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 Real will offset losses from the drop in Nexpoint Real's long position.| Sachem Capital vs. Apollo Commercial Real | Sachem Capital vs. Ready Capital Corp | Sachem Capital vs. Ellington Residential Mortgage | Sachem Capital vs. KKR Real Estate |
| Nexpoint Real vs. Ellington Residential Mortgage | Nexpoint Real vs. Ares Commercial Real | Nexpoint Real vs. TPG RE Finance | Nexpoint Real vs. Ellington Financial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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