Correlation Between Harvest Clean and First Trust
Can any of the company-specific risk be diversified away by investing in both Harvest Clean and First Trust 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 Harvest Clean and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harvest Clean Energy and First Trust Nasdaq, you can compare the effects of market volatilities on Harvest Clean and First Trust 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 Harvest Clean with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Clean and First Trust.
Diversification Opportunities for Harvest Clean and First Trust
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harvest and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Clean Energy and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and Harvest Clean 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 Harvest Clean Energy are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of Harvest Clean i.e., Harvest Clean and First Trust go up and down completely randomly.
Pair Corralation between Harvest Clean and First Trust
Assuming the 90 days trading horizon Harvest Clean Energy is expected to under-perform the First Trust. In addition to that, Harvest Clean is 1.39 times more volatile than First Trust Nasdaq. It trades about -0.07 of its total potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.13 per unit of volatility. If you would invest 1,550 in First Trust Nasdaq on September 4, 2024 and sell it today you would earn a total of 55.00 from holding First Trust Nasdaq or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Harvest Clean Energy vs. First Trust Nasdaq
Performance |
| Timeline |
| Harvest Clean Energy |
| First Trust Nasdaq |
Harvest Clean and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harvest Clean and First Trust
The main advantage of trading using opposite Harvest Clean and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Clean position performs unexpectedly, First Trust 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 Trust will offset losses from the drop in First Trust's long position.| Harvest Clean vs. Harvest Premium Yield | Harvest Clean vs. Harvest Balanced Income | Harvest Clean vs. Harvest Energy Leaders | Harvest Clean vs. Harvest Eli Lilly |
| First Trust vs. First Trust Indxx | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX | First Trust vs. First Trust Indxx |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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