Correlation Between Nexpoint Real and Angel Oak

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

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

Diversification Opportunities for Nexpoint Real and Angel Oak

0.1

Correlation Coefficient

Nexpoint Real  Angel Oak

Average diversification

The 3 months correlation between Nexpoint and Angel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Angel Oak Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Mortgage and Nexpoint Real 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 Nexpoint Real Estate are associated (or correlated) with Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Mortgage has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Angel Oak go up and down completely randomly.

Pair Corralation between Nexpoint Real and Angel Oak

Given the investment horizon of 90 days Nexpoint Real is expected to generate 2.05 times less return on investment than Angel Oak. But when comparing it to its historical volatility, Nexpoint Real Estate is 1.11 times less risky than Angel Oak. It trades about 0.06 of its potential returns per unit of risk. Angel Oak Mortgage is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  883.00  in Angel Oak Mortgage on December 28, 2024 and sell it today you would earn a total of  85.00  from holding Angel Oak Mortgage or generate 9.63% return on investment over 90 days.

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

Nexpoint Real Estate  vs.  Angel Oak Mortgage

Nexpoint Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexpoint Real Estate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Nexpoint Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Angel Oak Mortgage

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Mortgage are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Angel Oak may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nexpoint Real and Angel Oak

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

The idea behind Nexpoint Real Estate and Angel Oak Mortgage 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.