Correlation Between Highland Longshort and Nuveen Strategic

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

By analyzing existing cross correlation between Highland Longshort Healthcare and Nuveen Strategic Municipal, you can compare the effects of market volatilities on Highland Longshort and Nuveen Strategic 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 Longshort with a short position of Nuveen Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Nuveen Strategic.

Diversification Opportunities for Highland Longshort and Nuveen Strategic

-0.24

Correlation Coefficient

Highland Longshort  Nuveen Strategic

Very good diversification

The 3 months correlation between Highland and Nuveen is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Nuveen Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Strategic Mun and Highland Longshort 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 Longshort Healthcare are associated (or correlated) with Nuveen Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Strategic Mun has no effect on the direction of Highland Longshort i.e., Highland Longshort and Nuveen Strategic go up and down completely randomly.

Pair Corralation between Highland Longshort and Nuveen Strategic

Assuming the 90 days horizon Highland Longshort Healthcare is expected to under-perform the Nuveen Strategic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Highland Longshort Healthcare is 1.07 times less risky than Nuveen Strategic. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Nuveen Strategic Municipal is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  984.00  in Nuveen Strategic Municipal on December 21, 2024 and sell it today you would earn a total of  13.00  from holding Nuveen Strategic Municipal or generate 1.32% return on investment over 90 days.

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

Highland Longshort Healthcare  vs.  Nuveen Strategic Municipal

Highland Longshort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highland Longshort Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Highland Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Strategic Mun

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Strategic Municipal are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Highland Longshort and Nuveen Strategic

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

The idea behind Highland Longshort Healthcare and Nuveen Strategic Municipal 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..