Correlation Between Highland Long/short and Global Concentrated
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Global Concentrated 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 Global Concentrated 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 Global Centrated Portfolio, you can compare the effects of market volatilities on Highland Long/short and Global Concentrated 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 Global Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Global Concentrated.
Diversification Opportunities for Highland Long/short and Global Concentrated
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Highland and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por 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 Global Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Highland Long/short i.e., Highland Long/short and Global Concentrated go up and down completely randomly.
Pair Corralation between Highland Long/short and Global Concentrated
Assuming the 90 days horizon Highland Long/short is expected to generate 4.8 times less return on investment than Global Concentrated. But when comparing it to its historical volatility, Highland Longshort Healthcare is 4.99 times less risky than Global Concentrated. It trades about 0.1 of its potential returns per unit of risk. Global Centrated Portfolio is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,039 in Global Centrated Portfolio on September 3, 2024 and sell it today you would earn a total of 287.00 from holding Global Centrated Portfolio or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Global Centrated Portfolio
Performance |
| Timeline |
| Highland Long/short |
| Global Centrated Por |
Highland Long/short and Global Concentrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Global Concentrated
The main advantage of trading using opposite Highland Long/short and Global Concentrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Global Concentrated 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 Global Concentrated will offset losses from the drop in Global Concentrated's long position.| Highland Long/short vs. Ab Value Fund | Highland Long/short vs. Balanced Fund Investor | Highland Long/short vs. Rbb Fund | Highland Long/short vs. Omni Small Cap Value |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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