Correlation Between Highwood Asset and Minco Capital
Can any of the company-specific risk be diversified away by investing in both Highwood Asset and Minco Capital 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 Minco Capital 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 Minco Capital Corp, you can compare the effects of market volatilities on Highwood Asset and Minco Capital 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 Minco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwood Asset and Minco Capital.
Diversification Opportunities for Highwood Asset and Minco Capital
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highwood and Minco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and Minco Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minco Capital Corp 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 Minco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minco Capital Corp has no effect on the direction of Highwood Asset i.e., Highwood Asset and Minco Capital go up and down completely randomly.
Pair Corralation between Highwood Asset and Minco Capital
Assuming the 90 days horizon Highwood Asset is expected to generate 1.76 times less return on investment than Minco Capital. But when comparing it to its historical volatility, Highwood Asset Management is 1.56 times less risky than Minco Capital. It trades about 0.03 of its potential returns per unit of risk. Minco Capital Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Minco Capital Corp on August 26, 2024 and sell it today you would earn a total of 0.00 from holding Minco Capital Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highwood Asset Management vs. Minco Capital Corp
Performance |
| Timeline |
| Highwood Asset Management |
| Minco Capital Corp |
Highwood Asset and Minco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwood Asset and Minco Capital
The main advantage of trading using opposite Highwood Asset and Minco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset position performs unexpectedly, Minco Capital 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 Minco Capital will offset losses from the drop in Minco Capital's long position.| Highwood Asset vs. Royal Bank of | Highwood Asset vs. Toronto Dominion Bank | Highwood Asset vs. Toronto Dominion Bank Pref | Highwood Asset vs. Amazon CDR |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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