Correlation Between Highlight Communications and Targa Resources
Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Targa Resources 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 Highlight Communications and Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Communications AG and Targa Resources Corp, you can compare the effects of market volatilities on Highlight Communications and Targa Resources 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 Highlight Communications with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Targa Resources.
Diversification Opportunities for Highlight Communications and Targa Resources
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highlight and Targa is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp and Highlight Communications 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 Highlight Communications AG are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of Highlight Communications i.e., Highlight Communications and Targa Resources go up and down completely randomly.
Pair Corralation between Highlight Communications and Targa Resources
Assuming the 90 days trading horizon Highlight Communications is expected to generate 96.98 times less return on investment than Targa Resources. In addition to that, Highlight Communications is 1.56 times more volatile than Targa Resources Corp. It trades about 0.0 of its total potential returns per unit of risk. Targa Resources Corp is currently generating about 0.23 per unit of volatility. If you would invest 13,001 in Targa Resources Corp on September 26, 2024 and sell it today you would earn a total of 4,079 from holding Targa Resources Corp or generate 31.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Highlight Communications AG vs. Targa Resources Corp
Performance |
Timeline |
Highlight Communications |
Targa Resources Corp |
Highlight Communications and Targa Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highlight Communications and Targa Resources
The main advantage of trading using opposite Highlight Communications and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.Highlight Communications vs. AXWAY SOFTWARE EO | Highlight Communications vs. Summit Materials | Highlight Communications vs. Eagle Materials | Highlight Communications vs. Heidelberg Materials AG |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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