Correlation Between First Horizon and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both First Horizon and Highway Holdings 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 First Horizon and Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon and Highway Holdings Limited, you can compare the effects of market volatilities on First Horizon and Highway Holdings 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 First Horizon with a short position of Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and Highway Holdings.
Diversification Opportunities for First Horizon and Highway Holdings
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Highway is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings and First Horizon 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 First Horizon are associated (or correlated) with Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of First Horizon i.e., First Horizon and Highway Holdings go up and down completely randomly.
Pair Corralation between First Horizon and Highway Holdings
Assuming the 90 days trading horizon First Horizon is expected to generate 1.04 times less return on investment than Highway Holdings. But when comparing it to its historical volatility, First Horizon is 2.51 times less risky than Highway Holdings. It trades about 0.15 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Highway Holdings Limited on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Highway Holdings Limited or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon vs. Highway Holdings Limited
Performance |
| Timeline |
| First Horizon |
| Highway Holdings |
First Horizon and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and Highway Holdings
The main advantage of trading using opposite First Horizon and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon position performs unexpectedly, Highway Holdings 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 Highway Holdings will offset losses from the drop in Highway Holdings' long position.| First Horizon vs. Vistra Energy Corp | First Horizon vs. Kenon Holdings | First Horizon vs. Western Copper and | First Horizon vs. Highway Holdings Limited |
| Highway Holdings vs. Northwest Pipe | Highway Holdings vs. Haynes International | Highway Holdings vs. Mayville Engineering Co | Highway Holdings vs. Ryerson Holding Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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