Correlation Between Highland Longshort and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Highland Longshort 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 Longshort 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 Longshort Healthcare and Dow Jones Industrial, you can compare the effects of market volatilities on Highland Longshort 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 Longshort with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Dow Jones.
Diversification Opportunities for Highland Longshort and Dow Jones
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highland and Dow is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare 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 Longshort 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 Longshort Healthcare 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 Longshort i.e., Highland Longshort and Dow Jones go up and down completely randomly.
Pair Corralation between Highland Longshort and Dow Jones
If you would invest 4,263,520 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 211,243 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Dow Jones Industrial
Performance |
| Timeline |
Highland Longshort and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Highland Longshort Healthcare
Pair trading matchups for Highland Longshort
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Highland Longshort and Dow Jones
The main advantage of trading using opposite Highland Longshort and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Longshort 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 Longshort vs. Franklin Natural Resources | Highland Longshort vs. Hennessy Bp Energy | Highland Longshort vs. Thrivent Natural Resources | Highland Longshort vs. Pimco Energy Tactical |
| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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