Correlation Between Highland Funds and Ellsworth Growth

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

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

Diversification Opportunities for Highland Funds and Ellsworth Growth

0.75

Correlation Coefficient

Highland Funds  Ellsworth Growth

Poor diversification

The 3 months correlation between Highland and Ellsworth is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Highland Funds I and Ellsworth Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellsworth Growth and Highland Funds 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 Funds I are associated (or correlated) with Ellsworth Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellsworth Growth has no effect on the direction of Highland Funds i.e., Highland Funds and Ellsworth Growth go up and down completely randomly.

Pair Corralation between Highland Funds and Ellsworth Growth

Assuming the 90 days trading horizon Highland Funds I is expected to generate 0.73 times more return on investment than Ellsworth Growth. However, Highland Funds I is 1.37 times less risky than Ellsworth Growth. It trades about -0.06 of its potential returns per unit of risk. Ellsworth Growth and is currently generating about -0.11 per unit of risk. If you would invest  1,710  in Highland Funds I on October 6, 2024 and sell it today you would lose (27.00) from holding Highland Funds I or give up 1.58% of portfolio value over 90 days.

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

Highland Funds I  vs.  Ellsworth Growth and

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 inconsistent performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ellsworth Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ellsworth Growth and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Ellsworth Growth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Highland Funds and Ellsworth Growth

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

The idea behind Highland Funds I and Ellsworth Growth and 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.