Correlation Between Ab Small and Nexpoint Real

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Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small and Nexpoint Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Nexpoint Real Estate, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Nexpoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Nexpoint Real.

Diversification Opportunities for Ab Small and Nexpoint Real

SCYVXNexpointDiversified AwaySCYVXNexpointDiversified Away100%
0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between SCYVX and Nexpoint is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap 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 Ab Small 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 Ab Small Cap 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 Ab Small i.e., Ab Small and Nexpoint Real go up and down completely randomly.

Pair Corralation between Ab Small and Nexpoint Real

Assuming the 90 days horizon Ab Small Cap is expected to under-perform the Nexpoint Real. In addition to that, Ab Small is 4.01 times more volatile than Nexpoint Real Estate. It trades about -0.23 of its total potential returns per unit of risk. Nexpoint Real Estate is currently generating about 0.18 per unit of volatility. If you would invest  1,607  in Nexpoint Real Estate on November 27, 2024 and sell it today you would earn a total of  15.00  from holding Nexpoint Real Estate or generate 0.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Ab Small Cap  vs.  Nexpoint Real Estate

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -8-6-4-20246
JavaScript chart by amCharts 3.21.15SCYVX NRSCX
       Timeline  
Ab Small Cap 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ab Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb14.51515.51616.5
Nexpoint Real Estate 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nexpoint Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nexpoint Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb16.0516.116.1516.216.2516.3

Ab Small and Nexpoint Real Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.82-1.38-0.94-0.5-0.0680.270.711.151.592.03 123456
JavaScript chart by amCharts 3.21.15SCYVX NRSCX
       Returns  

Pair Trading with Ab Small and Nexpoint Real

The main advantage of trading using opposite Ab Small and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.
The idea behind Ab Small Cap and Nexpoint Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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