Correlation Between Highland Long/short and Bny Mellon

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Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Bny Mellon 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 Bny Mellon 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 Bny Mellon Bond, you can compare the effects of market volatilities on Highland Long/short and Bny Mellon 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 Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Bny Mellon.

Diversification Opportunities for Highland Long/short and Bny Mellon

-0.85
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Highland and Bny is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Bny Mellon Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Bond 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 Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Bond has no effect on the direction of Highland Long/short i.e., Highland Long/short and Bny Mellon go up and down completely randomly.

Pair Corralation between Highland Long/short and Bny Mellon

Assuming the 90 days horizon Highland Long/short is expected to generate 4.48 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, Highland Longshort Healthcare is 1.64 times less risky than Bny Mellon. It trades about 0.04 of its potential returns per unit of risk. Bny Mellon Bond is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,093  in Bny Mellon Bond on September 4, 2024 and sell it today you would earn a total of  9.00  from holding Bny Mellon Bond or generate 0.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Highland Longshort Healthcare  vs.  Bny Mellon Bond

 Performance 
       Timeline  
Highland Long/short 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Highland Longshort Healthcare are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Highland Long/short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Bny Mellon Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bny Mellon Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Highland Long/short and Bny Mellon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Highland Long/short and Bny Mellon

The main advantage of trading using opposite Highland Long/short and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Bny Mellon 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 Bny Mellon will offset losses from the drop in Bny Mellon's long position.
The idea behind Highland Longshort Healthcare and Bny Mellon Bond 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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