Correlation Between Fa 529 and Highland Small-cap

Can any of the company-specific risk be diversified away by investing in both Fa 529 and Highland Small-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 Fa 529 and Highland Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fa 529 Aggressive and Highland Small Cap Equity, you can compare the effects of market volatilities on Fa 529 and Highland Small-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 Fa 529 with a short position of Highland Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fa 529 and Highland Small-cap.

Diversification Opportunities for Fa 529 and Highland Small-cap

0.89

Correlation Coefficient

Fa 529  Highland Small-cap

Very poor diversification

The 3 months correlation between FFCGX and Highland is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fa 529 Aggressive and Highland Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Small Cap and Fa 529 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 Fa 529 Aggressive are associated (or correlated) with Highland Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Small Cap has no effect on the direction of Fa 529 i.e., Fa 529 and Highland Small-cap go up and down completely randomly.

Pair Corralation between Fa 529 and Highland Small-cap

Assuming the 90 days horizon Fa 529 Aggressive is expected to generate 0.97 times more return on investment than Highland Small-cap. However, Fa 529 Aggressive is 1.03 times less risky than Highland Small-cap. It trades about -0.06 of its potential returns per unit of risk. Highland Small Cap Equity is currently generating about -0.06 per unit of risk. If you would invest  4,027  in Fa 529 Aggressive on August 17, 2024 and sell it today you would lose (38.00) from holding Fa 529 Aggressive or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Fa 529 Aggressive  vs.  Highland Small Cap Equity

Fa 529 Aggressive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fa 529 Aggressive are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fa 529 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Highland Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Small Cap Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Highland Small-cap may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Fa 529 and Highland Small-cap

The main advantage of trading using opposite Fa 529 and Highland Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fa 529 position performs unexpectedly, Highland Small-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 Highland Small-cap will offset losses from the drop in Highland Small-cap's long position.

The idea behind Fa 529 Aggressive and Highland Small Cap Equity 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 the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.