Correlation Between Highland Longshort and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Highland Longshort and Transamerica Emerging 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 Transamerica Emerging 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 Transamerica Emerging Markets, you can compare the effects of market volatilities on Highland Longshort and Transamerica Emerging 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 Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Transamerica Emerging.
Diversification Opportunities for Highland Longshort and Transamerica Emerging
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highland and Transamerica is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging 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 Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Highland Longshort i.e., Highland Longshort and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Highland Longshort and Transamerica Emerging
Assuming the 90 days horizon Highland Longshort is expected to generate 1.35 times less return on investment than Transamerica Emerging. But when comparing it to its historical volatility, Highland Longshort Healthcare is 1.68 times less risky than Transamerica Emerging. It trades about 0.16 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 821.00 in Transamerica Emerging Markets on September 12, 2024 and sell it today you would earn a total of 114.00 from holding Transamerica Emerging Markets or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Highland Longshort |
| Transamerica Emerging |
Highland Longshort and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Longshort and Transamerica Emerging
The main advantage of trading using opposite Highland Longshort and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Longshort position performs unexpectedly, Transamerica Emerging 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's 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 |
| Transamerica Emerging vs. Highland Longshort Healthcare | Transamerica Emerging vs. Delaware Healthcare Fund | Transamerica Emerging vs. Fidelity Advisor Health | Transamerica Emerging vs. Lord Abbett Health |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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