Correlation Between Highwood Asset and Stroud Resources
Can any of the company-specific risk be diversified away by investing in both Highwood Asset and Stroud Resources 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 Stroud Resources 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 Stroud Resources, you can compare the effects of market volatilities on Highwood Asset and Stroud Resources 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 Stroud Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwood Asset and Stroud Resources.
Diversification Opportunities for Highwood Asset and Stroud Resources
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highwood and Stroud is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and Stroud Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stroud Resources 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 Stroud Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stroud Resources has no effect on the direction of Highwood Asset i.e., Highwood Asset and Stroud Resources go up and down completely randomly.
Pair Corralation between Highwood Asset and Stroud Resources
Assuming the 90 days horizon Highwood Asset is expected to generate 6.47 times less return on investment than Stroud Resources. But when comparing it to its historical volatility, Highwood Asset Management is 10.5 times less risky than Stroud Resources. It trades about 0.22 of its potential returns per unit of risk. Stroud Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Stroud Resources on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Stroud Resources or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highwood Asset Management vs. Stroud Resources
Performance |
| Timeline |
| Highwood Asset Management |
| Stroud Resources |
Highwood Asset and Stroud Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwood Asset and Stroud Resources
The main advantage of trading using opposite Highwood Asset and Stroud Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset position performs unexpectedly, Stroud Resources 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 Stroud Resources will offset losses from the drop in Stroud Resources' long position.| Highwood Asset vs. Brookfield Asset Management | Highwood Asset vs. NorthWest Healthcare Properties | Highwood Asset vs. Leveljump Healthcare Corp | Highwood Asset vs. Chemtrade Logistics Income |
| Stroud Resources vs. Tamarack Valley Energy | Stroud Resources vs. Gear Energy | Stroud Resources vs. Cardinal Energy | Stroud Resources vs. NuVista Energy |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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