Correlation Between Highland Long/short and Vanguard 500
Can any of the company-specific risk be diversified away by investing in both Highland Long/short and Vanguard 500 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 Vanguard 500 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 500 Index, you can compare the effects of market volatilities on Highland Long/short and Vanguard 500 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 Vanguard 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and Vanguard 500.
Diversification Opportunities for Highland Long/short and Vanguard 500
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highland and Vanguard is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Vanguard 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 500 Index 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 Vanguard 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard 500 Index has no effect on the direction of Highland Long/short i.e., Highland Long/short and Vanguard 500 go up and down completely randomly.
Pair Corralation between Highland Long/short and Vanguard 500
Assuming the 90 days horizon Highland Longshort Healthcare is expected to generate 0.12 times more return on investment than Vanguard 500. However, Highland Longshort Healthcare is 8.13 times less risky than Vanguard 500. It trades about -0.05 of its potential returns per unit of risk. Vanguard 500 Index is currently generating about -0.22 per unit of risk. If you would invest 1,645 in Highland Longshort Healthcare on October 17, 2024 and sell it today you would lose (2.00) from holding Highland Longshort Healthcare or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Longshort Healthcare vs. Vanguard 500 Index
Performance |
| Timeline |
| Highland Long/short |
| Vanguard 500 Index |
Highland Long/short and Vanguard 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Long/short and Vanguard 500
The main advantage of trading using opposite Highland Long/short and Vanguard 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Long/short position performs unexpectedly, Vanguard 500 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 500 will offset losses from the drop in Vanguard 500's long position.| Highland Long/short vs. Blackrock Health Sciences | Highland Long/short vs. Fidelity Advisor Health | Highland Long/short vs. Alphacentric Lifesci Healthcare | Highland Long/short vs. Putnam Global Health |
| Vanguard 500 vs. Baron Health Care | Vanguard 500 vs. Highland Longshort Healthcare | Vanguard 500 vs. Live Oak Health | Vanguard 500 vs. Prudential Health Sciences |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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