Correlation Between Highland Long/short and Total Return
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Total Return 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 Total Return 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 Total Return Bond, you can compare the effects of market volatilities on Highland Long/short and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Total Return.
Diversification Opportunities for Highland Long/short and Total Return
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highland and Total is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Highland Long/short i.e., Highland Long/short and Total Return go up and down completely randomly.
Pair Corralation between Highland Long/short and Total Return
Assuming the 90 days horizon Highland Long/short is expected to generate 1.14 times less return on investment than Total Return. In addition to that, Highland Long/short is 1.73 times more volatile than Total Return Bond. It trades about 0.04 of its total potential returns per unit of risk. Total Return Bond is currently generating about 0.08 per unit of volatility. If you would invest 947.00 in Total Return Bond on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Total Return Bond or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Total Return Bond
Performance |
| Timeline |
| Highland Long/short |
| Total Return Bond |
Highland Long/short and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Total Return
The main advantage of trading using opposite Highland Long/short and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Highland Long/short vs. Ab Value Fund | Highland Long/short vs. Balanced Fund Investor | Highland Long/short vs. Rbb Fund | Highland Long/short vs. Omni Small Cap Value |
| Total Return vs. Deutsche Health And | Total Return vs. Baron Health Care | Total Return vs. Highland Longshort Healthcare | Total Return vs. Alger Health Sciences |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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