Correlation Between Global Net and NexPoint Strategic

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

By analyzing existing cross correlation between Global Net Lease, and NexPoint Strategic Opportunities, you can compare the effects of market volatilities on Global Net and NexPoint Strategic 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 Global Net with a short position of NexPoint Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and NexPoint Strategic.

Diversification Opportunities for Global Net and NexPoint Strategic

-0.27

Correlation Coefficient

Global Net  NexPoint Strategic

Very good diversification

The 3 months correlation between Global and NexPoint is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease, and NexPoint Strategic Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Strategic and Global Net 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 Global Net Lease, are associated (or correlated) with NexPoint Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Strategic has no effect on the direction of Global Net i.e., Global Net and NexPoint Strategic go up and down completely randomly.

Pair Corralation between Global Net and NexPoint Strategic

Considering the 90-day investment horizon Global Net Lease, is expected to generate 0.32 times more return on investment than NexPoint Strategic. However, Global Net Lease, is 3.16 times less risky than NexPoint Strategic. It trades about 0.14 of its potential returns per unit of risk. NexPoint Strategic Opportunities is currently generating about 0.01 per unit of risk. If you would invest  711.00  in Global Net Lease, on October 12, 2024 and sell it today you would earn a total of  28.00  from holding Global Net Lease, or generate 3.94% return on investment over 90 days.

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

Global Net Lease,  vs.  NexPoint Strategic Opportuniti

Global Net Lease,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

NexPoint Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NexPoint Strategic Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, NexPoint Strategic is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Global Net and NexPoint Strategic

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

The idea behind Global Net Lease, and NexPoint Strategic Opportunities 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.