Correlation Between Nexpoint Real and Amprius Technologies

Can any of the company-specific risk be diversified away by investing in both Nexpoint Real and Amprius Technologies 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 Real and Amprius Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nexpoint Real Estate and Amprius Technologies, you can compare the effects of market volatilities on Nexpoint Real and Amprius Technologies 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 Real with a short position of Amprius Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Real and Amprius Technologies.

Diversification Opportunities for Nexpoint Real and Amprius Technologies

0.63

Correlation Coefficient

Nexpoint Real  Amprius Technologies

Poor diversification

The 3 months correlation between Nexpoint and Amprius is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Amprius Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amprius Technologies and Nexpoint Real 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 Real Estate are associated (or correlated) with Amprius Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amprius Technologies has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Amprius Technologies go up and down completely randomly.

Pair Corralation between Nexpoint Real and Amprius Technologies

Given the investment horizon of 90 days Nexpoint Real Estate is expected to generate 0.5 times more return on investment than Amprius Technologies. However, Nexpoint Real Estate is 1.99 times less risky than Amprius Technologies. It trades about -0.09 of its potential returns per unit of risk. Amprius Technologies is currently generating about -0.4 per unit of risk. If you would invest  1,374  in Nexpoint Real Estate on January 25, 2024 and sell it today you would lose (61.00) from holding Nexpoint Real Estate or give up 4.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Nexpoint Real Estate  vs.  Amprius Technologies

Nexpoint Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexpoint Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amprius Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amprius Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nexpoint Real and Amprius Technologies

The main advantage of trading using opposite Nexpoint Real and Amprius Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexpoint Real position performs unexpectedly, Amprius Technologies 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 Amprius Technologies will offset losses from the drop in Amprius Technologies' long position.

The idea behind Nexpoint Real Estate and Amprius Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.