Correlation Between NexPoint Real and Maxus Realty

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

Diversification Opportunities for NexPoint Real and Maxus Realty

-0.6

Correlation Coefficient

NexPoint Real  Maxus Realty

Excellent diversification

The 3 months correlation between NexPoint and Maxus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Real Estate and Maxus Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxus Realty Trust 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 Maxus Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxus Realty Trust has no effect on the direction of NexPoint Real i.e., NexPoint Real and Maxus Realty go up and down completely randomly.

Pair Corralation between NexPoint Real and Maxus Realty

Assuming the 90 days trading horizon NexPoint Real Estate is expected to generate 0.24 times more return on investment than Maxus Realty. However, NexPoint Real Estate is 4.16 times less risky than Maxus Realty. It trades about 0.06 of its potential returns per unit of risk. Maxus Realty Trust is currently generating about -0.04 per unit of risk. If you would invest  1,659  in NexPoint Real Estate on August 31, 2024 and sell it today you would earn a total of  711.00  from holding NexPoint Real Estate or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.69%
Values	Daily Returns

NexPoint Real Estate  vs.  Maxus Realty Trust

NexPoint Real Estate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NexPoint Real Estate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, NexPoint Real may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Maxus Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxus Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Maxus Realty is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NexPoint Real and Maxus Realty

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

The idea behind NexPoint Real Estate and Maxus Realty Trust 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.