Correlation Between Malaga Financial and Nexpoint Real

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

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

Diversification Opportunities for Malaga Financial and Nexpoint Real

-0.37

Correlation Coefficient

Malaga Financial  Nexpoint Real

Very good diversification

The 3 months correlation between Malaga and Nexpoint is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Malaga Financial 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 Malaga Financial 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 Malaga Financial 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 Malaga Financial i.e., Malaga Financial and Nexpoint Real go up and down completely randomly.

Pair Corralation between Malaga Financial and Nexpoint Real

Given the investment horizon of 90 days Malaga Financial is expected to under-perform the Nexpoint Real. In addition to that, Malaga Financial is 4.33 times more volatile than Nexpoint Real Estate. It trades about -0.13 of its total potential returns per unit of risk. Nexpoint Real Estate is currently generating about 0.06 per unit of volatility. If you would invest  1,610  in Nexpoint Real Estate on December 22, 2024 and sell it today you would earn a total of  14.00  from holding Nexpoint Real Estate or generate 0.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Malaga Financial  vs.  Nexpoint Real Estate

Malaga Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Nexpoint Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexpoint Real Estate are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Malaga Financial and Nexpoint Real

The main advantage of trading using opposite Malaga Financial and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malaga Financial 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 Malaga Financial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.