Correlation Between Royce Value and Highland Global

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

By analyzing existing cross correlation between Royce Value Closed and Highland Global Allocation, you can compare the effects of market volatilities on Royce Value and Highland Global 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 Royce Value with a short position of Highland Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Value and Highland Global.

Diversification Opportunities for Royce Value and Highland Global

-0.42

Correlation Coefficient

Royce Value  Highland Global

Very good diversification

The 3 months correlation between Royce and Highland is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Royce Value Closed and Highland Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Global Allo and Royce Value 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 Royce Value Closed are associated (or correlated) with Highland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Global Allo has no effect on the direction of Royce Value i.e., Royce Value and Highland Global go up and down completely randomly.

Pair Corralation between Royce Value and Highland Global

Considering the 90-day investment horizon Royce Value Closed is expected to under-perform the Highland Global. But the stock apears to be less risky and, when comparing its historical volatility, Royce Value Closed is 1.09 times less risky than Highland Global. The stock trades about -0.12 of its potential returns per unit of risk. The Highland Global Allocation is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  657.00  in Highland Global Allocation on December 28, 2024 and sell it today you would earn a total of  177.00  from holding Highland Global Allocation or generate 26.94% return on investment over 90 days.

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

Royce Value Closed  vs.  Highland Global Allocation

Royce Value Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Value Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Highland Global Allo

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Global Allocation are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak essential indicators, Highland Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royce Value and Highland Global

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

The idea behind Royce Value Closed and Highland Global Allocation 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..