Correlation Between Nexpoint Real and Cherry Hill

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

Diversification Opportunities for Nexpoint Real and Cherry Hill

0.91

Correlation Coefficient

Nexpoint Real  Cherry Hill

Almost no diversification

The 3 months correlation between Nexpoint and Cherry is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Real Estate and Cherry Hill Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cherry Hill Mortgage 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 Cherry Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cherry Hill Mortgage has no effect on the direction of Nexpoint Real i.e., Nexpoint Real and Cherry Hill go up and down completely randomly.

Pair Corralation between Nexpoint Real and Cherry Hill

Given the investment horizon of 90 days Nexpoint Real Estate is expected to under-perform the Cherry Hill. But the stock apears to be less risky and, when comparing its historical volatility, Nexpoint Real Estate is 1.5 times less risky than Cherry Hill. The stock trades about -0.01 of its potential returns per unit of risk. The Cherry Hill Mortgage is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Cherry Hill Mortgage on February 3, 2025 and sell it today you would lose (13.00) from holding Cherry Hill Mortgage or give up 4.14% of portfolio value over 90 days.

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

Nexpoint Real Estate  vs.  Cherry Hill Mortgage

Nexpoint Real Estate

Risk-Adjusted Performance

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 nearly stable technical and fundamental indicators, Nexpoint Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Cherry Hill Mortgage

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nexpoint Real and Cherry Hill

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

The idea behind Nexpoint Real Estate and Cherry Hill Mortgage 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.