Correlation Between Rithm Property and NexPoint Real

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

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

Diversification Opportunities for Rithm Property and NexPoint Real

-0.45

Correlation Coefficient

Rithm Property  NexPoint Real

Very good diversification

The 3 months correlation between Rithm and NexPoint is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Property Trust 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 Rithm Property 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 Rithm Property Trust 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 Rithm Property i.e., Rithm Property and NexPoint Real go up and down completely randomly.

Pair Corralation between Rithm Property and NexPoint Real

Considering the 90-day investment horizon Rithm Property Trust is expected to under-perform the NexPoint Real. In addition to that, Rithm Property is 1.86 times more volatile than NexPoint Real Estate. It trades about -0.04 of its total potential returns per unit of risk. NexPoint Real Estate is currently generating about 0.05 per unit of volatility. If you would invest  1,589  in NexPoint Real Estate on September 26, 2024 and sell it today you would earn a total of  671.00  from holding NexPoint Real Estate or generate 42.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Rithm Property Trust  vs.  NexPoint Real Estate

Rithm Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NexPoint Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NexPoint Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic 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 Rithm Property and NexPoint Real

The main advantage of trading using opposite Rithm Property and NexPoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Property 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 Rithm Property Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.