Correlation Between Nasdaq 100 and Highland Long/short
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 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 Nasdaq 100 2x Strategy and Highland Longshort Healthcare, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Highland Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Highland Long/short.
Diversification Opportunities for Nasdaq 100 and Highland Long/short
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and Highland is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy 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 Nasdaq 100 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 Nasdaq 100 2x Strategy 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 Nasdaq 100 i.e., Nasdaq 100 and Highland Long/short go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Highland Long/short
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 10.27 times more return on investment than Highland Long/short. However, Nasdaq 100 is 10.27 times more volatile than Highland Longshort Healthcare. It trades about 0.08 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 55,303 in Nasdaq 100 2x Strategy on August 29, 2024 and sell it today you would earn a total of 1,955 from holding Nasdaq 100 2x Strategy or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Nasdaq 100 2x |
| Highland Long/short |
Nasdaq 100 and Highland Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Highland Long/short
The main advantage of trading using opposite Nasdaq 100 and Highland Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Dow 2x Strategy |
| Highland Long/short vs. Highland Merger Arbitrage | Highland Long/short vs. Highland Small Cap Equity | Highland Long/short vs. Highland Small Cap Equity | Highland Long/short vs. Highland Small Cap Equity |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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