Correlation Between Nexpoint Real and Rithm Capital

Can any of the company-specific risk be diversified away by investing in both Nexpoint Real and Rithm Capital 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 Rithm Capital 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 Rithm Capital Corp, you can compare the effects of market volatilities on Nexpoint Real and Rithm Capital 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 Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexpoint Real and Rithm Capital.

Diversification Opportunities for Nexpoint Real and Rithm Capital

0.42

Correlation Coefficient

Nexpoint Real  Rithm Capital

Very weak diversification

The 3 months correlation between Nexpoint and Rithm is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp 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 Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Rithm Capital go up and down completely randomly.

Pair Corralation between Nexpoint Real and Rithm Capital

Given the investment horizon of 90 days Nexpoint Real is expected to generate 1.16 times less return on investment than Rithm Capital. In addition to that, Nexpoint Real is 1.71 times more volatile than Rithm Capital Corp. It trades about 0.04 of its total potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.08 per unit of volatility. If you would invest  699.00  in Rithm Capital Corp on September 14, 2024 and sell it today you would earn a total of  411.50  from holding Rithm Capital Corp or generate 58.87% return on investment over 90 days.

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

Nexpoint Real Estate  vs.  Rithm Capital Corp

Nexpoint Real Estate

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexpoint Real Estate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Nexpoint Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rithm Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rithm Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nexpoint Real and Rithm Capital

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

The idea behind Nexpoint Real Estate and Rithm Capital Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.