Correlation Between Highland Global and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Highland Global and Dow Jones 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 Highland Global and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Global Allocation and Dow Jones Industrial, you can compare the effects of market volatilities on Highland Global and Dow Jones 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 Highland Global with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Global and Dow Jones.
Diversification Opportunities for Highland Global and Dow Jones
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highland and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Highland Global Allocation and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Highland Global 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 Highland Global Allocation are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Highland Global i.e., Highland Global and Dow Jones go up and down completely randomly.
Pair Corralation between Highland Global and Dow Jones
Given the investment horizon of 90 days Highland Global is expected to generate 8.1 times less return on investment than Dow Jones. In addition to that, Highland Global is 1.19 times more volatile than Dow Jones Industrial. It trades about 0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Global Allocation vs. Dow Jones Industrial
Performance |
| Timeline |
Highland Global and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Highland Global Allocation
Pair trading matchups for Highland Global
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Highland Global and Dow Jones
The main advantage of trading using opposite Highland Global and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Global position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Highland Global vs. Neuberger Berman Next | Highland Global vs. Doubleline Yield Opportunities | Highland Global vs. Doubleline Income Solutions | Highland Global vs. Clough Global Ef |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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