Correlation Between Harvest Equal and First Trust
Can any of the company-specific risk be diversified away by investing in both Harvest Equal 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 Equal 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 Equal Weight and First Trust Indxx, you can compare the effects of market volatilities on Harvest Equal 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 Equal with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Equal and First Trust.
Diversification Opportunities for Harvest Equal and First Trust
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Harvest and First is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Equal Weight and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Harvest Equal 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 Equal Weight 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 Indxx has no effect on the direction of Harvest Equal i.e., Harvest Equal and First Trust go up and down completely randomly.
Pair Corralation between Harvest Equal and First Trust
Assuming the 90 days trading horizon Harvest Equal is expected to generate 2.17 times less return on investment than First Trust. But when comparing it to its historical volatility, Harvest Equal Weight is 1.0 times less risky than First Trust. It trades about 0.05 of its potential returns per unit of risk. First Trust Indxx is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 788.00 in First Trust Indxx on September 12, 2024 and sell it today you would earn a total of 412.00 from holding First Trust Indxx or generate 52.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harvest Equal Weight vs. First Trust Indxx
Performance |
| Timeline |
| Harvest Equal Weight |
| First Trust Indxx |
Harvest Equal and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harvest Equal and First Trust
The main advantage of trading using opposite Harvest Equal and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Equal 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 Equal vs. Harvest Healthcare Leaders | Harvest Equal vs. CI Gold Giants | Harvest Equal vs. BMO Global High | Harvest Equal vs. First Asset Energy |
| First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX | First Trust vs. First Trust Indxx | First Trust vs. First Trust NASDAQ |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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