Correlation Between Highland Long/short and First Investors

Can any of the company-specific risk be diversified away by investing in both Highland Long/short and First Investors 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 Long/short and First Investors 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 First Investors Growth, you can compare the effects of market volatilities on Highland Long/short and First Investors 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 Long/short with a short position of First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Long/short and First Investors.

Diversification Opportunities for Highland Long/short and First Investors

0.6

Correlation Coefficient

Highland Long/short  First Investors

Poor diversification

The 3 months correlation between Highland and First is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Highland Longshort Healthcare and First Investors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Growth and Highland Long/short 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Growth has no effect on the direction of Highland Long/short i.e., Highland Long/short and First Investors go up and down completely randomly.

Pair Corralation between Highland Long/short and First Investors

Assuming the 90 days horizon Highland Long/short is expected to generate 2.63 times less return on investment than First Investors. But when comparing it to its historical volatility, Highland Longshort Healthcare is 2.25 times less risky than First Investors. It trades about 0.2 of its potential returns per unit of risk. First Investors Growth is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,515  in First Investors Growth on May 27, 2025 and sell it today you would earn a total of  145.00  from holding First Investors Growth or generate 9.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Highland Longshort Healthcare  vs.  First Investors Growth

Highland Long/short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Longshort Healthcare are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Highland Long/short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Investors Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Investors Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Investors may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Highland Long/short and First Investors

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

The idea behind Highland Longshort Healthcare and First Investors Growth 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.