Correlation Between Highland Merger and Counterpoint Tactical
Can any of the company-specific risk be diversified away by investing in both Highland Merger and Counterpoint Tactical 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 Merger and Counterpoint Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Merger Arbitrage and Counterpoint Tactical Income, you can compare the effects of market volatilities on Highland Merger and Counterpoint Tactical 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 Merger with a short position of Counterpoint Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Merger and Counterpoint Tactical.
Diversification Opportunities for Highland Merger and Counterpoint Tactical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highland and Counterpoint is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Highland Merger Arbitrage and Counterpoint Tactical Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical and Highland Merger 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 Merger Arbitrage are associated (or correlated) with Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of Highland Merger i.e., Highland Merger and Counterpoint Tactical go up and down completely randomly.
Pair Corralation between Highland Merger and Counterpoint Tactical
Assuming the 90 days horizon Highland Merger is expected to generate 1.43 times less return on investment than Counterpoint Tactical. But when comparing it to its historical volatility, Highland Merger Arbitrage is 1.3 times less risky than Counterpoint Tactical. It trades about 0.15 of its potential returns per unit of risk. Counterpoint Tactical Income is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 996.00 in Counterpoint Tactical Income on September 3, 2024 and sell it today you would earn a total of 148.00 from holding Counterpoint Tactical Income or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Merger Arbitrage vs. Counterpoint Tactical Income
Performance |
| Timeline |
| Highland Merger Arbitrage |
| Counterpoint Tactical |
Highland Merger and Counterpoint Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Merger and Counterpoint Tactical
The main advantage of trading using opposite Highland Merger and Counterpoint Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Merger position performs unexpectedly, Counterpoint Tactical 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 Counterpoint Tactical will offset losses from the drop in Counterpoint Tactical's long position.| Highland Merger vs. Prudential Government Money | Highland Merger vs. Wt Mutual Fund | Highland Merger vs. Ashmore Emerging Markets | Highland Merger vs. Transamerica Funds |
| Counterpoint Tactical vs. Counterpoint Tactical Income | Counterpoint Tactical vs. Doubleline E Fixed | Counterpoint Tactical vs. Bts Tactical Fixed | Counterpoint Tactical vs. Highland Merger Arbitrage |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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