Correlation Between Harvest Equal and Scotia International

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Can any of the company-specific risk be diversified away by investing in both Harvest Equal and Scotia International 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 Scotia International 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 Scotia International Equity, you can compare the effects of market volatilities on Harvest Equal and Scotia International 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 Scotia International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Equal and Scotia International.

Diversification Opportunities for Harvest Equal and Scotia International

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Harvest and Scotia is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Equal Weight and Scotia International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotia International 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 Scotia International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotia International has no effect on the direction of Harvest Equal i.e., Harvest Equal and Scotia International go up and down completely randomly.

Pair Corralation between Harvest Equal and Scotia International

Assuming the 90 days trading horizon Harvest Equal Weight is expected to generate 1.33 times more return on investment than Scotia International. However, Harvest Equal is 1.33 times more volatile than Scotia International Equity. It trades about 0.18 of its potential returns per unit of risk. Scotia International Equity is currently generating about 0.12 per unit of risk. If you would invest  1,731  in Harvest Equal Weight on September 5, 2024 and sell it today you would earn a total of  54.00  from holding Harvest Equal Weight or generate 3.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Harvest Equal Weight  vs.  Scotia International Equity

 Performance 
       Timeline  
Harvest Equal Weight 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Equal Weight are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Harvest Equal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Scotia International 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Scotia International Equity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Scotia International is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Harvest Equal and Scotia International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harvest Equal and Scotia International

The main advantage of trading using opposite Harvest Equal and Scotia International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Equal position performs unexpectedly, Scotia International 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 Scotia International will offset losses from the drop in Scotia International's long position.
The idea behind Harvest Equal Weight and Scotia International Equity 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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