Correlation Between Highland Long/short and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Highland Long/short 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 Long/short 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 Long/short 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 Long/short with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Dow Jones.
Diversification Opportunities for Highland Long/short and Dow Jones
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Highland and Dow is 0.86. 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 Long/short 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 Long/short i.e., Highland Long/short and Dow Jones go up and down completely randomly.
Pair Corralation between Highland Long/short and Dow Jones
Assuming the 90 days horizon Highland Long/short is expected to generate 11.22 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Highland Longshort Healthcare is 4.39 times less risky than Dow Jones. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Dow Jones Industrial
Performance |
| Timeline |
Highland Long/short and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Highland Longshort Healthcare
Pair trading matchups for Highland Long/short
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Highland Long/short and Dow Jones
The main advantage of trading using opposite Highland Long/short and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short 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 Long/short vs. Highland Merger Arbitrage | Highland Long/short vs. Highland Small Cap Equity | Highland Long/short vs. Highland Small Cap Equity | Highland Long/short vs. Highland Small Cap Equity |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |