Correlation Between MicroSectors FANG and Highland Capital

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

By analyzing existing cross correlation between MicroSectors FANG Index and Highland Capital Management, you can compare the effects of market volatilities on MicroSectors FANG and Highland Capital 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 MicroSectors FANG with a short position of Highland Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Highland Capital.

Diversification Opportunities for MicroSectors FANG and Highland Capital

-0.83

Correlation Coefficient

MicroSectors FANG  Highland Capital

Pay attention - limited upside

The 3 months correlation between MicroSectors and Highland is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Highland Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Capital Man and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with Highland Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Capital Man has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Highland Capital go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Highland Capital

If you would invest  1,462  in Highland Capital Management on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Highland Capital Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

MicroSectors FANG Index  vs.  Highland Capital Management

MicroSectors FANG Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Highland Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Highland Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MicroSectors FANG and Highland Capital

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

The idea behind MicroSectors FANG Index and Highland Capital Management 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.