Correlation Between Definity Financial and Highwood Asset
Can any of the company-specific risk be diversified away by investing in both Definity Financial and Highwood Asset 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 Definity Financial and Highwood Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and Highwood Asset Management, you can compare the effects of market volatilities on Definity Financial and Highwood Asset 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 Definity Financial with a short position of Highwood Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Highwood Asset.
Diversification Opportunities for Definity Financial and Highwood Asset
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Definity and Highwood is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and Highwood Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwood Asset Management and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Highwood Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwood Asset Management has no effect on the direction of Definity Financial i.e., Definity Financial and Highwood Asset go up and down completely randomly.
Pair Corralation between Definity Financial and Highwood Asset
Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.39 times more return on investment than Highwood Asset. However, Definity Financial Corp is 2.58 times less risky than Highwood Asset. It trades about 0.11 of its potential returns per unit of risk. Highwood Asset Management is currently generating about 0.0 per unit of risk. If you would invest 3,503 in Definity Financial Corp on September 4, 2024 and sell it today you would earn a total of 2,367 from holding Definity Financial Corp or generate 67.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. Highwood Asset Management
Performance |
| Timeline |
| Definity Financial Corp |
| Highwood Asset Management |
Definity Financial and Highwood Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Highwood Asset
The main advantage of trading using opposite Definity Financial and Highwood Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, Highwood Asset 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 Highwood Asset will offset losses from the drop in Highwood Asset's long position.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| Highwood Asset vs. NeXGold Mining Corp | Highwood Asset vs. Bragg Gaming Group | Highwood Asset vs. Maple Leaf Foods | Highwood Asset vs. Data Communications Management |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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