Correlation Between Highland Longshort and Amg Southernsun
Can any of the company-specific risk be diversified away by investing in both Highland Longshort and Amg Southernsun 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 Longshort and Amg Southernsun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Longshort Healthcare and Amg Southernsun Equity, you can compare the effects of market volatilities on Highland Longshort and Amg Southernsun 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 Longshort with a short position of Amg Southernsun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and Amg Southernsun.
Diversification Opportunities for Highland Longshort and Amg Southernsun
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highland and Amg is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and Amg Southernsun Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Southernsun Equity and Highland Longshort 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 Longshort Healthcare are associated (or correlated) with Amg Southernsun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Southernsun Equity has no effect on the direction of Highland Longshort i.e., Highland Longshort and Amg Southernsun go up and down completely randomly.
Pair Corralation between Highland Longshort and Amg Southernsun
Assuming the 90 days horizon Highland Longshort Healthcare is expected to generate 0.1 times more return on investment than Amg Southernsun. However, Highland Longshort Healthcare is 9.67 times less risky than Amg Southernsun. It trades about 0.01 of its potential returns per unit of risk. Amg Southernsun Equity is currently generating about -0.13 per unit of risk. If you would invest 1,637 in Highland Longshort Healthcare on September 29, 2024 and sell it today you would earn a total of 2.00 from holding Highland Longshort Healthcare or generate 0.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Highland Longshort Healthcare vs. Amg Southernsun Equity
Performance |
Timeline |
Highland Longshort |
Amg Southernsun Equity |
Highland Longshort and Amg Southernsun Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highland Longshort and Amg Southernsun
The main advantage of trading using opposite Highland Longshort and Amg Southernsun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Longshort position performs unexpectedly, Amg Southernsun 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 Amg Southernsun will offset losses from the drop in Amg Southernsun's long position.Highland Longshort vs. Transamerica Emerging Markets | ||
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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