Correlation Between Highland LongShort and Ab Cap

By analyzing existing cross correlation between Highland LongShort Healthcare and Ab Cap Fund, you can compare the effects of market volatilities on Highland LongShort and Ab Cap 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 Ab Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland LongShort and Ab Cap.
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Can any of the company-specific risk be diversified away by investing in both Highland LongShort and Ab Cap 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 Ab Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Highland LongShort and Ab Cap

0.28
  Correlation Coefficient
Highland LongShort
Ab Cap Fund

Modest diversification

The 3 months correlation between Highland and ASRLX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Highland LongShort Healthcare and Ab Cap Fund in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Ab Cap Fund 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 Ab Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Cap Fund has no effect on the direction of Highland LongShort i.e., Highland LongShort and Ab Cap go up and down completely randomly.

Pair Corralation between Highland LongShort and Ab Cap

Assuming the 90 days horizon Highland LongShort Healthcare is expected to under-perform the Ab Cap. In addition to that, Highland LongShort is 1.46 times more volatile than Ab Cap Fund. It trades about -0.07 of its total potential returns per unit of risk. Ab Cap Fund is currently generating about 0.01 per unit of volatility. If you would invest  1,295  in Ab Cap Fund on October 28, 2021 and sell it today you would earn a total of  28.00  from holding Ab Cap Fund or generate 2.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.66%
ValuesDaily Returns

Highland LongShort Healthcare  vs.  Ab Cap Fund

 Performance (%) 
      Timeline 
Highland LongShort 
Highland Performance
0 of 100
Over the last 90 days Highland LongShort Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
Ab Cap Fund 
ASRLX Performance
0 of 100
Over the last 90 days Ab Cap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in February 2022. The current disturbance may also be a sign of long term up-swing for the fund investors.

Highland LongShort and Ab Cap Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Highland LongShort and Ab Cap

The main advantage of trading using opposite Highland LongShort and Ab Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland LongShort position performs unexpectedly, Ab Cap 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 Ab Cap will offset losses from the drop in Ab Cap's long position.
The idea behind Highland LongShort Healthcare and Ab Cap Fund 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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