Correlation Between Short Duration and Highland Merger
Can any of the company-specific risk be diversified away by investing in both Short Duration and Highland Merger 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 Short Duration and Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Inflation and Highland Merger Arbitrage, you can compare the effects of market volatilities on Short Duration and Highland Merger 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 Short Duration with a short position of Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Highland Merger.
Diversification Opportunities for Short Duration and Highland Merger
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Short and Highland is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage and Short Duration 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 Short Duration Inflation are associated (or correlated) with Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of Short Duration i.e., Short Duration and Highland Merger go up and down completely randomly.
Pair Corralation between Short Duration and Highland Merger
Assuming the 90 days horizon Short Duration is expected to generate 1.26 times less return on investment than Highland Merger. In addition to that, Short Duration is 1.62 times more volatile than Highland Merger Arbitrage. It trades about 0.07 of its total potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.14 per unit of volatility. If you would invest 1,782 in Highland Merger Arbitrage on August 25, 2024 and sell it today you would earn a total of 163.00 from holding Highland Merger Arbitrage or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Short Duration Inflation vs. Highland Merger Arbitrage
Performance |
| Timeline |
| Short Duration Inflation |
| Highland Merger Arbitrage |
Short Duration and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and Highland Merger
The main advantage of trading using opposite Short Duration and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.| Short Duration vs. Ab Bond Inflation | Short Duration vs. Western Asset Inflation | Short Duration vs. Altegris Futures Evolution | Short Duration vs. Western Asset Inflation |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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