Correlation Between Highwood Asset and US Financial
Can any of the company-specific risk be diversified away by investing in both Highwood Asset and US Financial 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 Highwood Asset and US Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highwood Asset Management and US Financial 15, you can compare the effects of market volatilities on Highwood Asset and US Financial 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 Highwood Asset with a short position of US Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwood Asset and US Financial.
Diversification Opportunities for Highwood Asset and US Financial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highwood and FTU-PB is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and US Financial 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Financial 15 and Highwood Asset 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 Highwood Asset Management are associated (or correlated) with US Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Financial 15 has no effect on the direction of Highwood Asset i.e., Highwood Asset and US Financial go up and down completely randomly.
Pair Corralation between Highwood Asset and US Financial
Assuming the 90 days horizon Highwood Asset is expected to generate 6.96 times less return on investment than US Financial. In addition to that, Highwood Asset is 1.4 times more volatile than US Financial 15. It trades about 0.01 of its total potential returns per unit of risk. US Financial 15 is currently generating about 0.12 per unit of volatility. If you would invest 618.00 in US Financial 15 on September 3, 2024 and sell it today you would earn a total of 154.00 from holding US Financial 15 or generate 24.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highwood Asset Management vs. US Financial 15
Performance |
| Timeline |
| Highwood Asset Management |
| US Financial 15 |
Highwood Asset and US Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwood Asset and US Financial
The main advantage of trading using opposite Highwood Asset and US Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset position performs unexpectedly, US Financial 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 US Financial will offset losses from the drop in US Financial's long position.| Highwood Asset vs. Colliers International Group | Highwood Asset vs. Altus Group Limited | Highwood Asset vs. Harvest Global REIT | Highwood Asset vs. International Zeolite Corp |
| US Financial vs. Apple Inc CDR | US Financial vs. Microsoft Corp CDR | US Financial vs. Amazon CDR | US Financial vs. Alphabet Inc CDR |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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