Correlation Between Elysee Development and Highland Funds

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

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

Diversification Opportunities for Elysee Development and Highland Funds

0.43

Correlation Coefficient

Elysee Development  Highland Funds

Very weak diversification

The 3 months correlation between Elysee and Highland is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Elysee Development Corp 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 Elysee Development 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 Elysee Development Corp 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 Elysee Development i.e., Elysee Development and Highland Funds go up and down completely randomly.

Pair Corralation between Elysee Development and Highland Funds

Assuming the 90 days horizon Elysee Development Corp is expected to generate 6.32 times more return on investment than Highland Funds. However, Elysee Development is 6.32 times more volatile than Highland Funds I. It trades about 0.0 of its potential returns per unit of risk. Highland Funds I is currently generating about -0.01 per unit of risk. If you would invest  41.00  in Elysee Development Corp on October 26, 2024 and sell it today you would lose (20.00) from holding Elysee Development Corp or give up 48.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.85%
Values	Daily Returns

Elysee Development Corp  vs.  Highland Funds I

Elysee Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elysee Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Elysee Development and Highland Funds

The main advantage of trading using opposite Elysee Development and Highland Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elysee Development 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 Elysee Development Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.