Correlation Between Highland Longshort and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Highland Longshort and Vanguard Extended 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 Longshort and Vanguard Extended 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 Vanguard Extended Market, you can compare the effects of market volatilities on Highland Longshort and Vanguard Extended 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 Longshort with a short position of Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Vanguard Extended.
Diversification Opportunities for Highland Longshort and Vanguard Extended
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Highland and Vanguard is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market and Highland Longshort 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 Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Highland Longshort i.e., Highland Longshort and Vanguard Extended go up and down completely randomly.
Pair Corralation between Highland Longshort and Vanguard Extended
Assuming the 90 days horizon Highland Longshort Healthcare is expected to under-perform the Vanguard Extended. But the mutual fund apears to be less risky and, when comparing its historical volatility, Highland Longshort Healthcare is 5.61 times less risky than Vanguard Extended. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Vanguard Extended Market is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 37,282 in Vanguard Extended Market on September 13, 2024 and sell it today you would earn a total of 816.00 from holding Vanguard Extended Market or generate 2.19% 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. Vanguard Extended Market
Performance |
| Timeline |
| Highland Longshort |
| Vanguard Extended Market |
Highland Longshort and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Longshort and Vanguard Extended
The main advantage of trading using opposite Highland Longshort and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Longshort position performs unexpectedly, Vanguard Extended 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 Vanguard Extended will offset losses from the drop in Vanguard Extended's long position.| Highland Longshort vs. Janus High Yield Fund | Highland Longshort vs. Msift High Yield | Highland Longshort vs. Blackrock High Yield | Highland Longshort vs. T Rowe Price |
| Vanguard Extended vs. Vanguard Materials Index | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Global Minimum |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |