Correlation Between Highland Long/short and Live Oak
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Live Oak 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 Live Oak 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 Live Oak Health, you can compare the effects of market volatilities on Highland Long/short and Live Oak 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 Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Live Oak.
Diversification Opportunities for Highland Long/short and Live Oak
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highland and Live is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Live Oak Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Health 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 Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Health has no effect on the direction of Highland Long/short i.e., Highland Long/short and Live Oak go up and down completely randomly.
Pair Corralation between Highland Long/short and Live Oak
Assuming the 90 days horizon Highland Long/short is expected to generate 4.73 times less return on investment than Live Oak. But when comparing it to its historical volatility, Highland Longshort Healthcare is 4.23 times less risky than Live Oak. It trades about 0.08 of its potential returns per unit of risk. Live Oak Health is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,166 in Live Oak Health on August 29, 2024 and sell it today you would earn a total of 42.00 from holding Live Oak Health or generate 1.94% 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. Live Oak Health
Performance |
| Timeline |
| Highland Long/short |
| Live Oak Health |
Highland Long/short and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Live Oak
The main advantage of trading using opposite Highland Long/short and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Live Oak 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 Live Oak will offset losses from the drop in Live Oak'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 |
| Live Oak vs. Fidelity Advisor Technology | Live Oak vs. Fidelity Advisor Biotechnology | Live Oak vs. Fidelity Advisor Financial | Live Oak vs. Fidelity Advisor Utilities |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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