Correlation Between College Retirement and Highland Longshort
Can any of the company-specific risk be diversified away by investing in both College Retirement and Highland Longshort 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 College Retirement and Highland Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Highland Longshort Healthcare, you can compare the effects of market volatilities on College Retirement and Highland Longshort 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 College Retirement with a short position of Highland Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Highland Longshort.
Diversification Opportunities for College Retirement and Highland Longshort
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between College and Highland is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Longshort and College Retirement 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 College Retirement Equities are associated (or correlated) with Highland Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Longshort has no effect on the direction of College Retirement i.e., College Retirement and Highland Longshort go up and down completely randomly.
Pair Corralation between College Retirement and Highland Longshort
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 4.2 times more return on investment than Highland Longshort. However, College Retirement is 4.2 times more volatile than Highland Longshort Healthcare. It trades about 0.09 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.15 per unit of risk. If you would invest 29,810 in College Retirement Equities on November 8, 2024 and sell it today you would earn a total of 5,516 from holding College Retirement Equities or generate 18.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Highland Longshort Healthcare
Performance |
| Timeline |
| College Retirement |
| Highland Longshort |
College Retirement and Highland Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Highland Longshort
The main advantage of trading using opposite College Retirement and Highland Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement position performs unexpectedly, Highland Longshort 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 Longshort will offset losses from the drop in Highland Longshort's long position.| College Retirement vs. Advent Claymore Convertible | College Retirement vs. Lord Abbett Convertible | College Retirement vs. Allianzgi Convertible Income | College Retirement vs. Fidelity Sai Convertible |
| Highland Longshort vs. T Rowe Price | Highland Longshort vs. T Rowe Price | Highland Longshort vs. Alliancebernstein Global Highome | Highland Longshort vs. Rational Strategic Allocation |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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