Correlation Between NexPoint Strategic and Healthcare Trust

Can any of the company-specific risk be diversified away by investing in both NexPoint Strategic and Healthcare Trust 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 Strategic and Healthcare Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NexPoint Strategic Opportunities and Healthcare Trust PR, you can compare the effects of market volatilities on NexPoint Strategic and Healthcare Trust 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 Strategic with a short position of Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexPoint Strategic and Healthcare Trust.

Diversification Opportunities for NexPoint Strategic and Healthcare Trust

-0.7

Correlation Coefficient

NexPoint Strategic  Healthcare Trust

Excellent diversification

The 3 months correlation between NexPoint and Healthcare is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Strategic Opportuniti and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust and NexPoint Strategic 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 Strategic Opportunities are associated (or correlated) with Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of NexPoint Strategic i.e., NexPoint Strategic and Healthcare Trust go up and down completely randomly.

Pair Corralation between NexPoint Strategic and Healthcare Trust

Given the investment horizon of 90 days NexPoint Strategic Opportunities is expected to generate 2.39 times more return on investment than Healthcare Trust. However, NexPoint Strategic is 2.39 times more volatile than Healthcare Trust PR. It trades about 0.11 of its potential returns per unit of risk. Healthcare Trust PR is currently generating about -0.13 per unit of risk. If you would invest  568.00  in NexPoint Strategic Opportunities on October 1, 2024 and sell it today you would earn a total of  49.04  from holding NexPoint Strategic Opportunities or generate 8.63% return on investment over 90 days.

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

NexPoint Strategic Opportuniti  vs.  Healthcare Trust PR

NexPoint Strategic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NexPoint Strategic Opportunities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, NexPoint Strategic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Trust PR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NexPoint Strategic and Healthcare Trust

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

The idea behind NexPoint Strategic Opportunities and Healthcare Trust PR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.