Correlation Between Global X and Harvest Bank

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Can any of the company-specific risk be diversified away by investing in both Global X and Harvest Bank 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 Global X and Harvest Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and Harvest Bank Leaders, you can compare the effects of market volatilities on Global X and Harvest Bank 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 Global X with a short position of Harvest Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Harvest Bank.

Diversification Opportunities for Global X and Harvest Bank

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Global and Harvest is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Harvest Bank Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Bank Leaders and Global X 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 Global X Active are associated (or correlated) with Harvest Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Bank Leaders has no effect on the direction of Global X i.e., Global X and Harvest Bank go up and down completely randomly.

Pair Corralation between Global X and Harvest Bank

Assuming the 90 days trading horizon Global X is expected to generate 9.55 times less return on investment than Harvest Bank. But when comparing it to its historical volatility, Global X Active is 5.03 times less risky than Harvest Bank. It trades about 0.11 of its potential returns per unit of risk. Harvest Bank Leaders is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,292  in Harvest Bank Leaders on September 5, 2024 and sell it today you would earn a total of  140.00  from holding Harvest Bank Leaders or generate 10.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Global X Active  vs.  Harvest Bank Leaders

 Performance 
       Timeline  
Global X Active 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Harvest Bank Leaders 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Bank Leaders are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Harvest Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

Global X and Harvest Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global X and Harvest Bank

The main advantage of trading using opposite Global X and Harvest Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Harvest Bank 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 Bank will offset losses from the drop in Harvest Bank's long position.
The idea behind Global X Active and Harvest Bank Leaders 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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