Correlation Between Highland Capital and Pacer Pacific
Can any of the company-specific risk be diversified away by investing in both Highland Capital and Pacer Pacific 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 Highland Capital and Pacer Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Capital Management and Pacer Pacific Asset, you can compare the effects of market volatilities on Highland Capital and Pacer Pacific 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 Highland Capital with a short position of Pacer Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Capital and Pacer Pacific.
Diversification Opportunities for Highland Capital and Pacer Pacific
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Highland and Pacer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Highland Capital Management and Pacer Pacific Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Pacific Asset and Highland Capital 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 Highland Capital Management are associated (or correlated) with Pacer Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Pacific Asset has no effect on the direction of Highland Capital i.e., Highland Capital and Pacer Pacific go up and down completely randomly.
Pair Corralation between Highland Capital and Pacer Pacific
Given the investment horizon of 90 days Highland Capital is expected to generate 1.3 times less return on investment than Pacer Pacific. In addition to that, Highland Capital is 3.22 times more volatile than Pacer Pacific Asset. It trades about 0.1 of its total potential returns per unit of risk. Pacer Pacific Asset is currently generating about 0.41 per unit of volatility. If you would invest 3,846 in Pacer Pacific Asset on August 27, 2024 and sell it today you would earn a total of 910.00 from holding Pacer Pacific Asset or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.85% |
| Values | Daily Returns |
Highland Capital Management vs. Pacer Pacific Asset
Performance |
| Timeline |
| Highland Capital Man |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pacer Pacific Asset |
Highland Capital and Pacer Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Capital and Pacer Pacific
The main advantage of trading using opposite Highland Capital and Pacer Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Capital position performs unexpectedly, Pacer Pacific 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 Pacer Pacific will offset losses from the drop in Pacer Pacific's long position.| Highland Capital vs. Franklin Liberty Short | Highland Capital vs. SPDR Bloomberg Investment | Highland Capital vs. VanEck Investment Grade |
| Pacer Pacific vs. Franklin Liberty Short | Pacer Pacific vs. SPDR Bloomberg Investment | Pacer Pacific vs. VanEck Investment Grade |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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