Correlation Between Highland Long/short and Chestnut Street
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Chestnut Street 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 Chestnut Street 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 Chestnut Street Exchange, you can compare the effects of market volatilities on Highland Long/short and Chestnut Street 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 Chestnut Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Chestnut Street.
Diversification Opportunities for Highland Long/short and Chestnut Street
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Highland and Chestnut is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Chestnut Street Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chestnut Street Exchange 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 Chestnut Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chestnut Street Exchange has no effect on the direction of Highland Long/short i.e., Highland Long/short and Chestnut Street go up and down completely randomly.
Pair Corralation between Highland Long/short and Chestnut Street
Assuming the 90 days horizon Highland Long/short is expected to generate 2.66 times less return on investment than Chestnut Street. But when comparing it to its historical volatility, Highland Longshort Healthcare is 3.69 times less risky than Chestnut Street. It trades about 0.13 of its potential returns per unit of risk. Chestnut Street Exchange is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 85,224 in Chestnut Street Exchange on August 30, 2024 and sell it today you would earn a total of 33,205 from holding Chestnut Street Exchange or generate 38.96% 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. Chestnut Street Exchange
Performance |
| Timeline |
| Highland Long/short |
| Chestnut Street Exchange |
Highland Long/short and Chestnut Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Chestnut Street
The main advantage of trading using opposite Highland Long/short and Chestnut Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Chestnut Street 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 Chestnut Street will offset losses from the drop in Chestnut Street's long position.| Highland Long/short vs. The Merger Fund | Highland Long/short vs. The Arbitrage Fund | Highland Long/short vs. HUMANA INC | Highland Long/short vs. Aquagold International |
| Chestnut Street vs. Goldman Sachs Technology | Chestnut Street vs. Science Technology Fund | Chestnut Street vs. Columbia Global Technology | Chestnut Street vs. Janus Global Technology |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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