Correlation Between Highland Longshort and William Blair
Can any of the company-specific risk be diversified away by investing in both Highland Longshort and William Blair 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 William Blair 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 William Blair Small, you can compare the effects of market volatilities on Highland Longshort and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Longshort and William Blair.
Diversification Opportunities for Highland Longshort and William Blair
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highland and William is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and William Blair Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of Highland Longshort i.e., Highland Longshort and William Blair go up and down completely randomly.
Pair Corralation between Highland Longshort and William Blair
Assuming the 90 days horizon Highland Longshort Healthcare is expected to generate 0.15 times more return on investment than William Blair. However, Highland Longshort Healthcare is 6.83 times less risky than William Blair. It trades about -0.38 of its potential returns per unit of risk. William Blair Small is currently generating about -0.5 per unit of risk. If you would invest 1,664 in Highland Longshort Healthcare on September 25, 2024 and sell it today you would lose (24.00) from holding Highland Longshort Healthcare or give up 1.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.24% |
Values | Daily Returns |
Highland Longshort Healthcare vs. William Blair Small
Performance |
Timeline |
Highland Longshort |
William Blair Small |
Highland Longshort and William Blair Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highland Longshort and William Blair
The main advantage of trading using opposite Highland Longshort and William Blair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Longshort position performs unexpectedly, William Blair 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 William Blair will offset losses from the drop in William Blair's long position.Highland Longshort vs. Highland Longshort Healthcare | Highland Longshort vs. Highland Merger Arbitrage | Highland Longshort vs. Highland Merger Arbitrage | Highland Longshort vs. Highland Merger Arbitrage |
William Blair vs. William Blair China | William Blair vs. William Blair Small Mid | William Blair vs. William Blair Small Mid | William Blair vs. William Blair Small Mid |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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