Correlation Between Ultra-short Fixed and Highland Long/short
Can any of the company-specific risk be diversified away by investing in both Ultra-short Fixed 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 Ultra-short Fixed 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 Ultra Short Fixed Income and Highland Longshort Healthcare, you can compare the effects of market volatilities on Ultra-short Fixed 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 Ultra-short Fixed with a short position of Highland Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra-short Fixed and Highland Long/short.
Diversification Opportunities for Ultra-short Fixed and Highland Long/short
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra-Short and Highland is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Short Fixed Income 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 Ultra-short Fixed 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 Ultra Short Fixed Income 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 Ultra-short Fixed i.e., Ultra-short Fixed and Highland Long/short go up and down completely randomly.
Pair Corralation between Ultra-short Fixed and Highland Long/short
Assuming the 90 days horizon Ultra Short Fixed Income is expected to under-perform the Highland Long/short. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ultra Short Fixed Income is 4.69 times less risky than Highland Long/short. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Highland Longshort Healthcare is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,567 in Highland Longshort Healthcare on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Highland Longshort Healthcare or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Short Fixed Income vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Ultra Short Fixed |
| Highland Long/short |
Ultra-short Fixed and Highland Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra-short Fixed and Highland Long/short
The main advantage of trading using opposite Ultra-short Fixed and Highland Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra-short Fixed 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.| Ultra-short Fixed vs. Champlain Mid Cap | Ultra-short Fixed vs. Franklin Growth Opportunities | Ultra-short Fixed vs. Smallcap Growth Fund | Ultra-short Fixed vs. Eip Growth And |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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