Correlation Between Highland Small-cap and Highland Merger
Can any of the company-specific risk be diversified away by investing in both Highland Small-cap and Highland Merger 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 Small-cap and Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Small Cap Equity and Highland Merger Arbitrage, you can compare the effects of market volatilities on Highland Small-cap and Highland Merger 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 Small-cap with a short position of Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Small-cap and Highland Merger.
Diversification Opportunities for Highland Small-cap and Highland Merger
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highland and Highland is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Highland Small Cap Equity and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage and Highland Small-cap 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 Small Cap Equity are associated (or correlated) with Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of Highland Small-cap i.e., Highland Small-cap and Highland Merger go up and down completely randomly.
Pair Corralation between Highland Small-cap and Highland Merger
Assuming the 90 days horizon Highland Small Cap Equity is expected to under-perform the Highland Merger. In addition to that, Highland Small-cap is 7.22 times more volatile than Highland Merger Arbitrage. It trades about -0.03 of its total potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.17 per unit of volatility. If you would invest 1,742 in Highland Merger Arbitrage on December 2, 2024 and sell it today you would earn a total of 211.00 from holding Highland Merger Arbitrage or generate 12.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Highland Small Cap Equity vs. Highland Merger Arbitrage
Performance |
Timeline |
Highland Small Cap |
Highland Merger Arbitrage |
Highland Small-cap and Highland Merger Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highland Small-cap and Highland Merger
The main advantage of trading using opposite Highland Small-cap and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Small-cap position performs unexpectedly, Highland Merger 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 Merger will offset losses from the drop in Highland Merger's long position.Highland Small-cap vs. Rbc Short Duration | Highland Small-cap vs. John Hancock Variable | Highland Small-cap vs. Calvert Short Duration | Highland Small-cap vs. Transamerica Short Term Bond |
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Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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