Correlation Between Apple and Highland Funds

Can any of the company-specific risk be diversified away by investing in both Apple and Highland Funds 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 Apple and Highland Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Highland Funds I, you can compare the effects of market volatilities on Apple and Highland Funds 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 Apple with a short position of Highland Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Highland Funds.

Diversification Opportunities for Apple and Highland Funds

-0.74

Correlation Coefficient

Apple  Highland Funds

Pay attention - limited upside

The 3 months correlation between Apple and Highland is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Highland Funds I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Funds I and Apple 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 Apple Inc are associated (or correlated) with Highland Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Funds I has no effect on the direction of Apple i.e., Apple and Highland Funds go up and down completely randomly.

Pair Corralation between Apple and Highland Funds

Given the investment horizon of 90 days Apple Inc is expected to generate 0.64 times more return on investment than Highland Funds. However, Apple Inc is 1.57 times less risky than Highland Funds. It trades about 0.58 of its potential returns per unit of risk. Highland Funds I is currently generating about -0.45 per unit of risk. If you would invest  22,828  in Apple Inc on September 20, 2024 and sell it today you would earn a total of  2,151  from holding Apple Inc or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Highland Funds I

Apple Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Highland Funds I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Funds I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Apple and Highland Funds

The main advantage of trading using opposite Apple and Highland Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Highland Funds 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 Funds will offset losses from the drop in Highland Funds' long position.

The idea behind Apple Inc and Highland Funds I 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.