Correlation Between Armada Hoffler and NexPoint Diversified

Can any of the company-specific risk be diversified away by investing in both Armada Hoffler and NexPoint Diversified 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 Armada Hoffler and NexPoint Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hoffler Properties and NexPoint Diversified Real, you can compare the effects of market volatilities on Armada Hoffler and NexPoint Diversified 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 Armada Hoffler with a short position of NexPoint Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hoffler and NexPoint Diversified.

Diversification Opportunities for Armada Hoffler and NexPoint Diversified

-0.83

Correlation Coefficient

Armada Hoffler  NexPoint Diversified

Pay attention - limited upside

The 3 months correlation between Armada and NexPoint is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hoffler Properties and NexPoint Diversified Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Diversified Real and Armada Hoffler 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 Armada Hoffler Properties are associated (or correlated) with NexPoint Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Diversified Real has no effect on the direction of Armada Hoffler i.e., Armada Hoffler and NexPoint Diversified go up and down completely randomly.

Pair Corralation between Armada Hoffler and NexPoint Diversified

Assuming the 90 days trading horizon Armada Hoffler is expected to generate 1.05 times less return on investment than NexPoint Diversified. But when comparing it to its historical volatility, Armada Hoffler Properties is 1.21 times less risky than NexPoint Diversified. It trades about 0.04 of its potential returns per unit of risk. NexPoint Diversified Real is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,314  in NexPoint Diversified Real on October 10, 2024 and sell it today you would earn a total of  266.00  from holding NexPoint Diversified Real or generate 20.24% return on investment over 90 days.

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

Armada Hoffler Properties  vs.  NexPoint Diversified Real

Armada Hoffler Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hoffler Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Armada Hoffler is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NexPoint Diversified Real

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NexPoint Diversified Real are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NexPoint Diversified is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hoffler and NexPoint Diversified

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

The idea behind Armada Hoffler Properties and NexPoint Diversified Real 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.