Correlation Between Highland Global and Repsol

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

By analyzing existing cross correlation between Highland Global Allocation and Repsol, you can compare the effects of market volatilities on Highland Global and Repsol 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 Global with a short position of Repsol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Global and Repsol.

Diversification Opportunities for Highland Global and Repsol

-0.29

Correlation Coefficient

Highland Global  Repsol

Very good diversification

The 3 months correlation between Highland and Repsol is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Highland Global Allocation and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol and Highland Global 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 Global Allocation are associated (or correlated) with Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of Highland Global i.e., Highland Global and Repsol go up and down completely randomly.

Pair Corralation between Highland Global and Repsol

Given the investment horizon of 90 days Highland Global is expected to generate 4.15 times less return on investment than Repsol. But when comparing it to its historical volatility, Highland Global Allocation is 1.12 times less risky than Repsol. It trades about 0.06 of its potential returns per unit of risk. Repsol is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,126  in Repsol on May 17, 2025 and sell it today you would earn a total of  204.00  from holding Repsol or generate 18.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Highland Global Allocation  vs.  Repsol

Highland Global Allo

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Global Allocation are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong essential indicators, Highland Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Repsol

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Repsol are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Repsol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highland Global and Repsol

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

The idea behind Highland Global Allocation and Repsol 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.