Correlation Between Highland Long/short and Mainstay Epoch
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Mainstay Epoch 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 Mainstay Epoch 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 Mainstay Epoch International, you can compare the effects of market volatilities on Highland Long/short and Mainstay Epoch 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 Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Mainstay Epoch.
Diversification Opportunities for Highland Long/short and Mainstay Epoch
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Highland and Mainstay is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Mainstay Epoch International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Inter 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 Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Inter has no effect on the direction of Highland Long/short i.e., Highland Long/short and Mainstay Epoch go up and down completely randomly.
Pair Corralation between Highland Long/short and Mainstay Epoch
Assuming the 90 days horizon Highland Long/short is expected to generate 1.13 times less return on investment than Mainstay Epoch. But when comparing it to its historical volatility, Highland Longshort Healthcare is 3.89 times less risky than Mainstay Epoch. It trades about 0.35 of its potential returns per unit of risk. Mainstay Epoch International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,761 in Mainstay Epoch International on October 23, 2024 and sell it today you would earn a total of 43.00 from holding Mainstay Epoch International or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Mainstay Epoch International
Performance |
| Timeline |
| Highland Long/short |
| Mainstay Epoch Inter |
Highland Long/short and Mainstay Epoch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Mainstay Epoch
The main advantage of trading using opposite Highland Long/short and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Mainstay Epoch 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 Mainstay Epoch will offset losses from the drop in Mainstay Epoch's long position.The idea behind Highland Longshort Healthcare and Mainstay Epoch International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Mainstay Epoch vs. Blackrock Health Sciences | Mainstay Epoch vs. Allianzgi Health Sciences | Mainstay Epoch vs. Highland Longshort Healthcare | Mainstay Epoch vs. Baillie Gifford 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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