Correlation Between Highland Long/short and Investment
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Investment 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 Investment 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 Investment Of America, you can compare the effects of market volatilities on Highland Long/short and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Investment.
Diversification Opportunities for Highland Long/short and Investment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Highland and Investment is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Investment Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Of America 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Of America has no effect on the direction of Highland Long/short i.e., Highland Long/short and Investment go up and down completely randomly.
Pair Corralation between Highland Long/short and Investment
Assuming the 90 days horizon Highland Long/short is expected to generate 3.83 times less return on investment than Investment. But when comparing it to its historical volatility, Highland Longshort Healthcare is 3.61 times less risky than Investment. It trades about 0.08 of its potential returns per unit of risk. Investment Of America is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,085 in Investment Of America on August 25, 2024 and sell it today you would earn a total of 82.00 from holding Investment Of America or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Investment Of America
Performance |
| Timeline |
| Highland Long/short |
| Investment Of America |
Highland Long/short and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Investment
The main advantage of trading using opposite Highland Long/short and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Highland Long/short vs. Icon Financial Fund | Highland Long/short vs. Mesirow Financial Small | Highland Long/short vs. Royce Global Financial | Highland Long/short vs. Vanguard Financials Index |
| Investment vs. Baron Health Care | Investment vs. Fidelity Advisor Health | Investment vs. Delaware Healthcare Fund | Investment vs. Highland Longshort Healthcare |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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