Correlation Between Vanguard Extended and Highland Longshort
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended 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 Vanguard Extended and Highland Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Highland Longshort Healthcare, you can compare the effects of market volatilities on Vanguard Extended 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 Vanguard Extended with a short position of Highland Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Highland Longshort.
Diversification Opportunities for Vanguard Extended and Highland Longshort
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Highland is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Longshort and Vanguard Extended 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 Vanguard Extended Market 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 Vanguard Extended i.e., Vanguard Extended and Highland Longshort go up and down completely randomly.
Pair Corralation between Vanguard Extended and Highland Longshort
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 5.61 times more return on investment than Highland Longshort. However, Vanguard Extended is 5.61 times more volatile than Highland Longshort Healthcare. It trades about 0.11 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about -0.17 per unit of risk. If you would invest 37,282 in Vanguard Extended Market on September 13, 2024 and sell it today you would earn a total of 816.00 from holding Vanguard Extended Market or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Vanguard Extended Market |
| Highland Longshort |
Vanguard Extended and Highland Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Highland Longshort
The main advantage of trading using opposite Vanguard Extended and Highland Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended 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.| Vanguard Extended vs. Vanguard Materials Index | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Global Minimum |
| Highland Longshort vs. Janus High Yield Fund | Highland Longshort vs. Msift High Yield | Highland Longshort vs. Blackrock High Yield | Highland Longshort vs. T Rowe Price |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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