Correlation Between First Trust and Harvest Equal
Can any of the company-specific risk be diversified away by investing in both First Trust and Harvest Equal 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 First Trust and Harvest Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and Harvest Equal Weight, you can compare the effects of market volatilities on First Trust and Harvest Equal 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 First Trust with a short position of Harvest Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Harvest Equal.
Diversification Opportunities for First Trust and Harvest Equal
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Harvest is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Harvest Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Equal Weight and First Trust 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 First Trust Senior are associated (or correlated) with Harvest Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Equal Weight has no effect on the direction of First Trust i.e., First Trust and Harvest Equal go up and down completely randomly.
Pair Corralation between First Trust and Harvest Equal
Assuming the 90 days trading horizon First Trust is expected to generate 6.97 times less return on investment than Harvest Equal. But when comparing it to its historical volatility, First Trust Senior is 3.75 times less risky than Harvest Equal. It trades about 0.1 of its potential returns per unit of risk. Harvest Equal Weight is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,696 in Harvest Equal Weight on October 20, 2024 and sell it today you would earn a total of 49.00 from holding Harvest Equal Weight or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. Harvest Equal Weight
Performance |
| Timeline |
| First Trust Senior |
| Harvest Equal Weight |
First Trust and Harvest Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Harvest Equal
The main advantage of trading using opposite First Trust and Harvest Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Harvest Equal 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 Harvest Equal will offset losses from the drop in Harvest Equal's long position.| First Trust vs. First Trust Global | First Trust vs. FT AlphaDEX Industrials | First Trust vs. First Trust Value | First Trust vs. Global X Active |
| Harvest Equal vs. Harvest Healthcare Leaders | Harvest Equal vs. CI Gold Giants | Harvest Equal vs. BMO Global High | Harvest Equal vs. First Asset Energy |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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