Correlation Between NexPoint Strategic and Gladstone Commercial

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

Diversification Opportunities for NexPoint Strategic and Gladstone Commercial

0.87

Correlation Coefficient

NexPoint Strategic  Gladstone Commercial

Very poor diversification

The 3 months correlation between NexPoint and Gladstone is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding NexPoint Strategic Opportuniti and Gladstone Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Commercial 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 Gladstone Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Commercial has no effect on the direction of NexPoint Strategic i.e., NexPoint Strategic and Gladstone Commercial go up and down completely randomly.

Pair Corralation between NexPoint Strategic and Gladstone Commercial

Given the investment horizon of 90 days NexPoint Strategic Opportunities is expected to under-perform the Gladstone Commercial. In addition to that, NexPoint Strategic is 1.96 times more volatile than Gladstone Commercial. It trades about -0.25 of its total potential returns per unit of risk. Gladstone Commercial is currently generating about -0.18 per unit of volatility. If you would invest  1,573  in Gladstone Commercial on January 8, 2025 and sell it today you would lose (236.00) from holding Gladstone Commercial or give up 15.0% of portfolio value over 90 days.

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

NexPoint Strategic Opportuniti  vs.  Gladstone Commercial

NexPoint Strategic

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Gladstone Commercial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gladstone Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NexPoint Strategic and Gladstone Commercial

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

The idea behind NexPoint Strategic Opportunities and Gladstone Commercial 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.

Check out your portfolio center.

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.