Correlation Between Fidelity New and Nexpoint Real

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

Diversification Opportunities for Fidelity New and Nexpoint Real

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Fidelity and NexPoint is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets 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 Fidelity New 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 Fidelity New Markets 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 Fidelity New i.e., Fidelity New and Nexpoint Real go up and down completely randomly.

Pair Corralation between Fidelity New and Nexpoint Real

Assuming the 90 days horizon Fidelity New is expected to generate 8.64 times less return on investment than Nexpoint Real. In addition to that, Fidelity New is 1.31 times more volatile than Nexpoint Real Estate. It trades about 0.01 of its total potential returns per unit of risk. Nexpoint Real Estate is currently generating about 0.15 per unit of volatility. If you would invest  1,606  in Nexpoint Real Estate on October 7, 2024 and sell it today you would earn a total of  25.00  from holding Nexpoint Real Estate or generate 1.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Fidelity New Markets  vs.  Nexpoint Real Estate

 Performance 
       Timeline  
Fidelity New Markets 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fidelity New Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fidelity New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Nexpoint Real Estate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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.

Fidelity New and Nexpoint Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity New and Nexpoint Real

The main advantage of trading using opposite Fidelity New and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New 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 Fidelity New Markets 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.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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