Correlation Between Highland Longshort and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Highland Longshort and Emerging Markets 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 Emerging Markets 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 Emerging Markets Fund, you can compare the effects of market volatilities on Highland Longshort and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Emerging Markets.
Diversification Opportunities for Highland Longshort and Emerging Markets
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highland and Emerging is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Highland Longshort i.e., Highland Longshort and Emerging Markets go up and down completely randomly.
Pair Corralation between Highland Longshort and Emerging Markets
Assuming the 90 days horizon Highland Longshort is expected to generate 1.3 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Highland Longshort Healthcare is 4.84 times less risky than Emerging Markets. It trades about 0.16 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,293 in Emerging Markets Fund on September 12, 2024 and sell it today you would earn a total of 156.00 from holding Emerging Markets Fund or generate 12.06% 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. Emerging Markets Fund
Performance |
| Timeline |
| Highland Longshort |
| Emerging Markets |
Highland Longshort and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Longshort and Emerging Markets
The main advantage of trading using opposite Highland Longshort and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Longshort position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Highland Longshort vs. Ab Bond Inflation | Highland Longshort vs. Western Asset Municipal | Highland Longshort vs. T Rowe Price | Highland Longshort vs. Doubleline Yield Opportunities |
| Emerging Markets vs. Invesco Global Health | Emerging Markets vs. Highland Longshort Healthcare | Emerging Markets vs. Fidelity Advisor Health | Emerging Markets vs. Allianzgi 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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