Correlation Between American Funds and Highland Longshort
Can any of the company-specific risk be diversified away by investing in both American Funds and Highland Longshort 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 American Funds and Highland Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Capital and Highland Longshort Healthcare, you can compare the effects of market volatilities on American Funds and Highland Longshort 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 American Funds with a short position of Highland Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Highland Longshort.
Diversification Opportunities for American Funds and Highland Longshort
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Highland is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Longshort and American Funds 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 American Funds Capital are associated (or correlated) with Highland Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Longshort has no effect on the direction of American Funds i.e., American Funds and Highland Longshort go up and down completely randomly.
Pair Corralation between American Funds and Highland Longshort
Assuming the 90 days horizon American Funds Capital is expected to generate 3.92 times more return on investment than Highland Longshort. However, American Funds is 3.92 times more volatile than Highland Longshort Healthcare. It trades about 0.12 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.17 per unit of risk. If you would invest 5,630 in American Funds Capital on September 2, 2024 and sell it today you would earn a total of 1,267 from holding American Funds Capital or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Capital vs. Highland Longshort Healthcare
Performance |
| Timeline |
| American Funds Capital |
| Highland Longshort |
American Funds and Highland Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Highland Longshort
The main advantage of trading using opposite American Funds and Highland Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Highland Longshort 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 Longshort will offset losses from the drop in Highland Longshort's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Highland Longshort vs. Fidelity Advisor Diversified | Highland Longshort vs. Adams Diversified Equity | Highland Longshort vs. Prudential Core Conservative | Highland Longshort vs. Jhancock Diversified Macro |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| CEOs Directory Screen CEOs from public companies around the world |