Correlation Between The Merger and Highland Merger
Can any of the company-specific risk be diversified away by investing in both The Merger and Highland Merger 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 The Merger and Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Merger Fund and Highland Merger Arbitrage, you can compare the effects of market volatilities on The Merger and Highland Merger 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 The Merger with a short position of Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Merger and Highland Merger.
Diversification Opportunities for The Merger and Highland Merger
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between The and Highland is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Merger Fund and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage and The 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 The Merger Fund are associated (or correlated) with Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of The Merger i.e., The Merger and Highland Merger go up and down completely randomly.
Pair Corralation between The Merger and Highland Merger
Assuming the 90 days horizon The Merger Fund is expected to under-perform the Highland Merger. In addition to that, The Merger is 1.88 times more volatile than Highland Merger Arbitrage. It trades about -0.03 of its total potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.11 per unit of volatility. If you would invest 1,943 in Highland Merger Arbitrage on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Highland Merger Arbitrage or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Merger Fund vs. Highland Merger Arbitrage
Performance |
| Timeline |
| Merger Fund |
| Highland Merger Arbitrage |
The Merger and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Merger and Highland Merger
The main advantage of trading using opposite The Merger and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Merger position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.| The Merger vs. Strategic Advisers International | The Merger vs. Strategic Advisers Income | The Merger vs. Aquagold International | The Merger vs. Morningstar Unconstrained Allocation |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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