Correlation Between Nexpoint Real and Dfa Commodity

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

Diversification Opportunities for Nexpoint Real and Dfa Commodity

0.09

Correlation Coefficient

Nexpoint Real  Dfa Commodity

Significant diversification

The 3 months correlation between Nexpoint and Dfa is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Dfa Commodity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Commodity Strategy 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 Dfa Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Commodity Strategy has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Dfa Commodity go up and down completely randomly.

Pair Corralation between Nexpoint Real and Dfa Commodity

Assuming the 90 days horizon Nexpoint Real is expected to generate 11.5 times less return on investment than Dfa Commodity. But when comparing it to its historical volatility, Nexpoint Real Estate is 3.07 times less risky than Dfa Commodity. It trades about 0.06 of its potential returns per unit of risk. Dfa Commodity Strategy is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  442.00  in Dfa Commodity Strategy on December 20, 2024 and sell it today you would earn a total of  43.00  from holding Dfa Commodity Strategy or generate 9.73% 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.  Dfa Commodity Strategy

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 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.

Dfa Commodity Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Commodity Strategy are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dfa Commodity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nexpoint Real and Dfa Commodity

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

The idea behind Nexpoint Real Estate and Dfa Commodity Strategy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.