Correlation Between Nexpoint Residential and Apartment Income
Can any of the company-specific risk be diversified away by investing in both Nexpoint Residential and Apartment Income 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 Apartment Income 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 Apartment Income REIT, you can compare the effects of market volatilities on Nexpoint Residential and Apartment Income 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 Apartment Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Residential and Apartment Income.
Diversification Opportunities for Nexpoint Residential and Apartment Income
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nexpoint and Apartment is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Residential Trust and Apartment Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Income REIT 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 Apartment Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Income REIT has no effect on the direction of Nexpoint Residential i.e., Nexpoint Residential and Apartment Income go up and down completely randomly.
Pair Corralation between Nexpoint Residential and Apartment Income
Given the investment horizon of 90 days Nexpoint Residential is expected to generate 2.23 times less return on investment than Apartment Income. But when comparing it to its historical volatility, Nexpoint Residential Trust is 2.59 times less risky than Apartment Income. It trades about 0.25 of its potential returns per unit of risk. Apartment Income REIT is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,147 in Apartment Income REIT on February 4, 2024 and sell it today you would earn a total of 711.00 from holding Apartment Income REIT or generate 22.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.65% |
Values | Daily Returns |
Nexpoint Residential Trust vs. Apartment Income REIT
Performance |
Timeline |
Nexpoint Residential |
Apartment Income REIT |
Nexpoint Residential and Apartment Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nexpoint Residential and Apartment Income
The main advantage of trading using opposite Nexpoint Residential and Apartment Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Residential position performs unexpectedly, Apartment Income 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 Apartment Income will offset losses from the drop in Apartment Income'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 |
Apartment Income vs. Clipper Realty | Apartment Income vs. UDR Inc | Apartment Income vs. Nexpoint Residential Trust | Apartment Income vs. BRT Realty Trust |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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