Correlation Between PURA and Highstreet
Can any of the company-specific risk be diversified away by investing in both PURA and Highstreet 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 PURA and Highstreet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PURA and Highstreet, you can compare the effects of market volatilities on PURA and Highstreet 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 PURA with a short position of Highstreet. Check out your portfolio center. Please also check ongoing floating volatility patterns of PURA and Highstreet.
Diversification Opportunities for PURA and Highstreet
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between PURA and Highstreet is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding PURA and Highstreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highstreet and PURA 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 PURA are associated (or correlated) with Highstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highstreet has no effect on the direction of PURA i.e., PURA and Highstreet go up and down completely randomly.
Pair Corralation between PURA and Highstreet
Assuming the 90 days trading horizon PURA is expected to generate 2.94 times less return on investment than Highstreet. But when comparing it to its historical volatility, PURA is 7.26 times less risky than Highstreet. It trades about 0.13 of its potential returns per unit of risk. Highstreet is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 120.00 in Highstreet on August 23, 2024 and sell it today you would earn a total of 11.00 from holding Highstreet or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.85% |
| Values | Daily Returns |
PURA vs. Highstreet
Performance |
| Timeline |
| PURA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Highstreet |
PURA and Highstreet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PURA and Highstreet
The main advantage of trading using opposite PURA and Highstreet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PURA position performs unexpectedly, Highstreet 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 Highstreet will offset losses from the drop in Highstreet's long position.The idea behind PURA and Highstreet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |