Correlation Between Highland Long/short and Tax Exempt
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Tax Exempt 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 Tax Exempt 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 Tax Exempt Bond, you can compare the effects of market volatilities on Highland Long/short and Tax Exempt 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 Tax Exempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Tax Exempt.
Diversification Opportunities for Highland Long/short and Tax Exempt
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highland and Tax is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Tax Exempt Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Bond 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 Tax Exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Bond has no effect on the direction of Highland Long/short i.e., Highland Long/short and Tax Exempt go up and down completely randomly.
Pair Corralation between Highland Long/short and Tax Exempt
Assuming the 90 days horizon Highland Long/short is expected to generate 1.14 times less return on investment than Tax Exempt. But when comparing it to its historical volatility, Highland Longshort Healthcare is 1.05 times less risky than Tax Exempt. It trades about 0.12 of its potential returns per unit of risk. Tax Exempt Bond is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,205 in Tax Exempt Bond on August 24, 2024 and sell it today you would earn a total of 43.00 from holding Tax Exempt Bond or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Tax Exempt Bond
Performance |
| Timeline |
| Highland Long/short |
| Tax Exempt Bond |
Highland Long/short and Tax Exempt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Tax Exempt
The main advantage of trading using opposite Highland Long/short and Tax Exempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Tax Exempt 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 Tax Exempt will offset losses from the drop in Tax Exempt's long position.| Highland Long/short vs. Pace High Yield | Highland Long/short vs. Multisector Bond Sma | Highland Long/short vs. Metropolitan West Porate | Highland Long/short vs. Ft 7934 Corporate |
| Tax Exempt vs. Fidelity Advisor Health | Tax Exempt vs. Highland Longshort Healthcare | Tax Exempt vs. The Hartford Healthcare | Tax Exempt vs. The Gabelli Healthcare |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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