Correlation Between Highland Funds and Gabelli Dividend

Can any of the company-specific risk be diversified away by investing in both Highland Funds and Gabelli Dividend 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 Gabelli Dividend 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 The Gabelli Dividend, you can compare the effects of market volatilities on Highland Funds and Gabelli Dividend 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 Gabelli Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Funds and Gabelli Dividend.

Diversification Opportunities for Highland Funds and Gabelli Dividend

0.63

Correlation Coefficient

Highland Funds  Gabelli Dividend

Poor diversification

The 3 months correlation between Highland and Gabelli is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Highland Funds I and The Gabelli Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Dividend 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 Gabelli Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Dividend has no effect on the direction of Highland Funds i.e., Highland Funds and Gabelli Dividend go up and down completely randomly.

Pair Corralation between Highland Funds and Gabelli Dividend

Assuming the 90 days trading horizon Highland Funds I is expected to under-perform the Gabelli Dividend. In addition to that, Highland Funds is 2.05 times more volatile than The Gabelli Dividend. It trades about -0.28 of its total potential returns per unit of risk. The Gabelli Dividend is currently generating about -0.09 per unit of volatility. If you would invest  2,423  in The Gabelli Dividend on September 23, 2024 and sell it today you would lose (65.00) from holding The Gabelli Dividend or give up 2.68% 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.  The Gabelli Dividend

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gabelli Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Gabelli Dividend is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Highland Funds and Gabelli Dividend

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

The idea behind Highland Funds I and The Gabelli Dividend 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.