Correlation Between Amer Beacon and Nexpoint Real

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

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

Diversification Opportunities for Amer Beacon and Nexpoint Real

0.13

Correlation Coefficient

Amer Beacon  Nexpoint Real

Average diversification

The 3 months correlation between Amer and Nexpoint is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Amer Beacon Garcia 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 Amer Beacon 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 Amer Beacon Garcia 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 Amer Beacon i.e., Amer Beacon and Nexpoint Real go up and down completely randomly.

Pair Corralation between Amer Beacon and Nexpoint Real

Assuming the 90 days horizon Amer Beacon Garcia is expected to generate 0.88 times more return on investment than Nexpoint Real. However, Amer Beacon Garcia is 1.14 times less risky than Nexpoint Real. It trades about -0.04 of its potential returns per unit of risk. Nexpoint Real Estate is currently generating about -0.04 per unit of risk. If you would invest  846.00  in Amer Beacon Garcia on October 26, 2024 and sell it today you would lose (9.00) from holding Amer Beacon Garcia or give up 1.06% of portfolio value over 90 days.

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

Amer Beacon Garcia  vs.  Nexpoint Real Estate

Amer Beacon Garcia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amer Beacon Garcia has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Amer Beacon 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

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.

Pair Trading with Amer Beacon and Nexpoint Real

The main advantage of trading using opposite Amer Beacon and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Beacon 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 Amer Beacon Garcia 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.