Correlation Between Dreyfus High and Highland Long/short
Can any of the company-specific risk be diversified away by investing in both Dreyfus High and Highland Long/short 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 Dreyfus High and Highland Long/short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus High Yield and Highland Longshort Healthcare, you can compare the effects of market volatilities on Dreyfus High and Highland Long/short 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 Dreyfus High with a short position of Highland Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus High and Highland Long/short.
Diversification Opportunities for Dreyfus High and Highland Long/short
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dreyfus and Highland is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus High Yield and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Long/short and Dreyfus High 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 Dreyfus High Yield are associated (or correlated) with Highland Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Long/short has no effect on the direction of Dreyfus High i.e., Dreyfus High and Highland Long/short go up and down completely randomly.
Pair Corralation between Dreyfus High and Highland Long/short
Assuming the 90 days horizon Dreyfus High is expected to generate 1.2 times less return on investment than Highland Long/short. In addition to that, Dreyfus High is 1.77 times more volatile than Highland Longshort Healthcare. It trades about 0.06 of its total potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.13 per unit of volatility. If you would invest 1,463 in Highland Longshort Healthcare on August 26, 2024 and sell it today you would earn a total of 194.00 from holding Highland Longshort Healthcare or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dreyfus High Yield vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Dreyfus High Yield |
| Highland Long/short |
Dreyfus High and Highland Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus High and Highland Long/short
The main advantage of trading using opposite Dreyfus High and Highland Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus High position performs unexpectedly, Highland Long/short 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 Long/short will offset losses from the drop in Highland Long/short's long position.| Dreyfus High vs. Highland Longshort Healthcare | Dreyfus High vs. Alger Health Sciences | Dreyfus High vs. Tekla Healthcare Opportunities | Dreyfus High vs. Delaware Healthcare Fund |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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