Correlation Between Nexpoint Residential and Alexanders

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

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

Diversification Opportunities for Nexpoint Residential and Alexanders

-0.59

Correlation Coefficient

Nexpoint Residential  Alexanders

Excellent diversification

The 3 months correlation between Nexpoint and Alexanders is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nexpoint Residential Trust and Alexanders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexanders and Nexpoint Residential 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 Residential Trust are associated (or correlated) with Alexanders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexanders has no effect on the direction of Nexpoint Residential i.e., Nexpoint Residential and Alexanders go up and down completely randomly.

Pair Corralation between Nexpoint Residential and Alexanders

Given the investment horizon of 90 days Nexpoint Residential Trust is expected to under-perform the Alexanders. In addition to that, Nexpoint Residential is 1.07 times more volatile than Alexanders. It trades about -0.11 of its total potential returns per unit of risk. Alexanders is currently generating about 0.29 per unit of volatility. If you would invest  20,432  in Alexanders on May 1, 2025 and sell it today you would earn a total of  5,414  from holding Alexanders or generate 26.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Nexpoint Residential Trust  vs.  Alexanders

Nexpoint Residential

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexpoint Residential Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Alexanders

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alexanders are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Alexanders showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexpoint Residential and Alexanders

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

The idea behind Nexpoint Residential Trust and Alexanders 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.