Correlation Between NexPoint Strategic and Presidio Property

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

Diversification Opportunities for NexPoint Strategic and Presidio Property

0.47

Correlation Coefficient

NexPoint Strategic  Presidio Property

Very weak diversification

The 3 months correlation between NexPoint and Presidio is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Strategic Opportuniti and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property 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 Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of NexPoint Strategic i.e., NexPoint Strategic and Presidio Property go up and down completely randomly.

Pair Corralation between NexPoint Strategic and Presidio Property

Given the investment horizon of 90 days NexPoint Strategic Opportunities is expected to under-perform the Presidio Property. But the stock apears to be less risky and, when comparing its historical volatility, NexPoint Strategic Opportunities is 2.78 times less risky than Presidio Property. The stock trades about -0.03 of its potential returns per unit of risk. The Presidio Property Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Presidio Property Trust on September 13, 2024 and sell it today you would earn a total of  6.00  from holding Presidio Property Trust or generate 8.7% return on investment over 90 days.

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

NexPoint Strategic Opportuniti  vs.  Presidio Property Trust

NexPoint Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NexPoint Strategic Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, NexPoint Strategic is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Presidio Property Trust

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Presidio Property Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Presidio Property unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NexPoint Strategic and Presidio Property

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

The idea behind NexPoint Strategic Opportunities and Presidio Property 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.