Correlation Between Highland Merger and Salient Mlp

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

By analyzing existing cross correlation between Highland Merger Arbitrage and Salient Mlp Energy, you can compare the effects of market volatilities on Highland Merger and Salient Mlp 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 Merger with a short position of Salient Mlp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Merger and Salient Mlp.

Diversification Opportunities for Highland Merger and Salient Mlp

0.44

Correlation Coefficient

Highland Merger  Salient Mlp

Very weak diversification

The 3 months correlation between Highland and Salient is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Highland Merger Arbitrage and Salient Mlp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Mlp Energy and Highland Merger 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 Merger Arbitrage are associated (or correlated) with Salient Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Mlp Energy has no effect on the direction of Highland Merger i.e., Highland Merger and Salient Mlp go up and down completely randomly.

Pair Corralation between Highland Merger and Salient Mlp

Assuming the 90 days horizon Highland Merger Arbitrage is expected to generate 0.04 times more return on investment than Salient Mlp. However, Highland Merger Arbitrage is 22.49 times less risky than Salient Mlp. It trades about 0.58 of its potential returns per unit of risk. Salient Mlp Energy is currently generating about -0.01 per unit of risk. If you would invest  1,937  in Highland Merger Arbitrage on September 16, 2024 and sell it today you would earn a total of  13.00  from holding Highland Merger Arbitrage or generate 0.67% return on investment over 90 days.

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

Highland Merger Arbitrage  vs.  Salient Mlp Energy

Highland Merger Arbitrage

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Merger Arbitrage are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Highland Merger is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Salient Mlp Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Mlp Energy are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Salient Mlp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Highland Merger and Salient Mlp

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

The idea behind Highland Merger Arbitrage and Salient Mlp Energy 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.