Correlation Between Highland Long/short and Health Biotchnology
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Health Biotchnology 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 Health Biotchnology 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 Health Biotchnology Portfolio, you can compare the effects of market volatilities on Highland Long/short and Health Biotchnology 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 Health Biotchnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Health Biotchnology.
Diversification Opportunities for Highland Long/short and Health Biotchnology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Highland and HEALTH is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Health Biotchnology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Biotchnology 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 Health Biotchnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Biotchnology has no effect on the direction of Highland Long/short i.e., Highland Long/short and Health Biotchnology go up and down completely randomly.
Pair Corralation between Highland Long/short and Health Biotchnology
Assuming the 90 days horizon Highland Long/short is expected to generate 3.03 times less return on investment than Health Biotchnology. But when comparing it to its historical volatility, Highland Longshort Healthcare is 4.35 times less risky than Health Biotchnology. It trades about 0.09 of its potential returns per unit of risk. Health Biotchnology Portfolio is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,418 in Health Biotchnology Portfolio on August 29, 2024 and sell it today you would earn a total of 32.00 from holding Health Biotchnology Portfolio or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Health Biotchnology Portfolio
Performance |
| Timeline |
| Highland Long/short |
| Health Biotchnology |
Highland Long/short and Health Biotchnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Health Biotchnology
The main advantage of trading using opposite Highland Long/short and Health Biotchnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Health Biotchnology 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 Health Biotchnology will offset losses from the drop in Health Biotchnology'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 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |