Correlation Between Highland Global and City National
Can any of the company-specific risk be diversified away by investing in both Highland Global and City National 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 Global and City National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Global Allocation and City National Rochdale, you can compare the effects of market volatilities on Highland Global and City National 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 Global with a short position of City National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Global and City National.
Diversification Opportunities for Highland Global and City National
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highland and City is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Highland Global Allocation and City National Rochdale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City National Rochdale and Highland Global 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 Global Allocation are associated (or correlated) with City National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City National Rochdale has no effect on the direction of Highland Global i.e., Highland Global and City National go up and down completely randomly.
Pair Corralation between Highland Global and City National
Assuming the 90 days horizon Highland Global Allocation is expected to generate 13.25 times more return on investment than City National. However, Highland Global is 13.25 times more volatile than City National Rochdale. It trades about 0.15 of its potential returns per unit of risk. City National Rochdale is currently generating about 0.26 per unit of risk. If you would invest 1,163 in Highland Global Allocation on November 1, 2024 and sell it today you would earn a total of 130.00 from holding Highland Global Allocation or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Global Allocation vs. City National Rochdale
Performance |
| Timeline |
| Highland Global Allo |
| City National Rochdale |
Highland Global and City National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Global and City National
The main advantage of trading using opposite Highland Global and City National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Global position performs unexpectedly, City National 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 City National will offset losses from the drop in City National's long position.The idea behind Highland Global Allocation and City National Rochdale pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| City National vs. Hunter Small Cap | City National vs. Nuveen Small Cap | City National vs. Ab Small Cap | City National vs. Ab Small Cap |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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