Correlation Between NYSE Composite and Highland Merger
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Highland Merger Arbitrage, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Highland Merger.
Diversification Opportunities for NYSE Composite and Highland Merger
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Highland is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Highland Merger go up and down completely randomly.
Pair Corralation between NYSE Composite and Highland Merger
Assuming the 90 days trading horizon NYSE Composite is expected to generate 9.01 times more return on investment than Highland Merger. However, NYSE Composite is 9.01 times more volatile than Highland Merger Arbitrage. It trades about 0.28 of its potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.26 per unit of risk. If you would invest 1,925,429 in NYSE Composite on November 4, 2024 and sell it today you would earn a total of 74,453 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Highland Merger Arbitrage
Performance |
| Timeline |
NYSE Composite and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Highland Merger Arbitrage
Pair trading matchups for Highland Merger
Pair Trading with NYSE Composite and Highland Merger
The main advantage of trading using opposite NYSE Composite and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Arrow Electronics | NYSE Composite vs. Cirmaker Technology | NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. Weibo Corp |
| Highland Merger vs. Fidelity Sai Inflationfocused | Highland Merger vs. Arrow Managed Futures | Highland Merger vs. Abbey Capital Futures | Highland Merger vs. Atac Inflation Rotation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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