Correlation Between Necessity Retail and NexPoint Strategic

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

By analyzing existing cross correlation between Necessity Retail REIT and NexPoint Strategic Opportunities, you can compare the effects of market volatilities on Necessity Retail and NexPoint Strategic 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 Necessity Retail with a short position of NexPoint Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Necessity Retail and NexPoint Strategic.

Diversification Opportunities for Necessity Retail and NexPoint Strategic

0.0

Correlation Coefficient

Necessity Retail  NexPoint Strategic

Pay attention - limited upside

The 3 months correlation between Necessity and NexPoint is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Necessity Retail REIT and NexPoint Strategic Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexPoint Strategic and Necessity Retail 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 Necessity Retail REIT are associated (or correlated) with NexPoint Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexPoint Strategic has no effect on the direction of Necessity Retail i.e., Necessity Retail and NexPoint Strategic go up and down completely randomly.

Pair Corralation between Necessity Retail and NexPoint Strategic

If you would invest (100.00) in Necessity Retail REIT on January 4, 2025 and sell it today you would earn a total of  100.00  from holding Necessity Retail REIT or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Necessity Retail REIT  vs.  NexPoint Strategic Opportuniti

Necessity Retail REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Necessity Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Necessity Retail is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Necessity Retail and NexPoint Strategic

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

The idea behind Necessity Retail REIT and NexPoint Strategic Opportunities 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..