Correlation Between Highland Global and Highland Floating

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

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

Diversification Opportunities for Highland Global and Highland Floating

0.44

Correlation Coefficient

Highland Global  Highland Floating

Very weak diversification

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

Pair Corralation between Highland Global and Highland Floating

Given the investment horizon of 90 days Highland Global Allocation is expected to generate 0.59 times more return on investment than Highland Floating. However, Highland Global Allocation is 1.7 times less risky than Highland Floating. It trades about 0.05 of its potential returns per unit of risk. Highland Floating Rate is currently generating about 0.03 per unit of risk. If you would invest  754.00  in Highland Global Allocation on August 31, 2024 and sell it today you would earn a total of  18.00  from holding Highland Global Allocation or generate 2.39% return on investment over 90 days.

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

Highland Global Allocation  vs.  Highland Floating Rate

Highland Global Allo

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Global Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong essential indicators, Highland Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Highland Floating Rate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Floating Rate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Highland Floating is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Highland Global and Highland Floating

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

The idea behind Highland Global Allocation and Highland Floating Rate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.