Correlation Between Red Oak and Highland Long/short
Can any of the company-specific risk be diversified away by investing in both Red Oak and Highland Long/short 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 Red Oak and Highland Long/short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and Highland Longshort Healthcare, you can compare the effects of market volatilities on Red Oak and Highland Long/short 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 Red Oak with a short position of Highland Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Highland Long/short.
Diversification Opportunities for Red Oak and Highland Long/short
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Highland is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Long/short and Red Oak 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 Red Oak Technology are associated (or correlated) with Highland Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Long/short has no effect on the direction of Red Oak i.e., Red Oak and Highland Long/short go up and down completely randomly.
Pair Corralation between Red Oak and Highland Long/short
Assuming the 90 days horizon Red Oak Technology is expected to generate 5.85 times more return on investment than Highland Long/short. However, Red Oak is 5.85 times more volatile than Highland Longshort Healthcare. It trades about 0.02 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.11 per unit of risk. If you would invest 4,823 in Red Oak Technology on August 25, 2024 and sell it today you would earn a total of 24.00 from holding Red Oak Technology or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Red Oak Technology vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Red Oak Technology |
| Highland Long/short |
Red Oak and Highland Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Oak and Highland Long/short
The main advantage of trading using opposite Red Oak and Highland Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak position performs unexpectedly, Highland Long/short 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 Long/short will offset losses from the drop in Highland Long/short's long position.| Red Oak vs. Pin Oak Equity | Red Oak vs. White Oak Select | Red Oak vs. Black Oak Emerging | Red Oak vs. Berkshire Focus |
| Highland Long/short vs. Global Technology Portfolio | Highland Long/short vs. Science Technology Fund | Highland Long/short vs. Fidelity Advisor Technology | Highland Long/short vs. Red Oak Technology |
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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