Correlation Between Guggenheim Risk and Nexpoint Real

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

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

Diversification Opportunities for Guggenheim Risk and Nexpoint Real

0.61

Correlation Coefficient

Guggenheim Risk  Nexpoint Real

Poor diversification

The 3 months correlation between Guggenheim and Nexpoint is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Risk Managed 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 Guggenheim Risk 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 Guggenheim Risk Managed 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 Guggenheim Risk i.e., Guggenheim Risk and Nexpoint Real go up and down completely randomly.

Pair Corralation between Guggenheim Risk and Nexpoint Real

Assuming the 90 days horizon Guggenheim Risk Managed is expected to under-perform the Nexpoint Real. In addition to that, Guggenheim Risk is 4.28 times more volatile than Nexpoint Real Estate. It trades about -0.04 of its total potential returns per unit of risk. Nexpoint Real Estate is currently generating about -0.03 per unit of volatility. If you would invest  1,628  in Nexpoint Real Estate on December 4, 2024 and sell it today you would lose (6.00) from holding Nexpoint Real Estate or give up 0.37% of portfolio value over 90 days.

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

Guggenheim Risk Managed  vs.  Nexpoint Real Estate

Guggenheim Risk Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guggenheim Risk Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guggenheim Risk 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

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 Guggenheim Risk and Nexpoint Real

The main advantage of trading using opposite Guggenheim Risk and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Risk 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 Guggenheim Risk Managed 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.