Correlation Between First Asset and Harvest Healthcare
Can any of the company-specific risk be diversified away by investing in both First Asset and Harvest Healthcare 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 Asset and Harvest Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Asset Tech and Harvest Healthcare Leaders, you can compare the effects of market volatilities on First Asset and Harvest Healthcare 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 Asset with a short position of Harvest Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Harvest Healthcare.
Diversification Opportunities for First Asset and Harvest Healthcare
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Harvest is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Tech and Harvest Healthcare Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Healthcare and First Asset 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 Asset Tech are associated (or correlated) with Harvest Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Healthcare has no effect on the direction of First Asset i.e., First Asset and Harvest Healthcare go up and down completely randomly.
Pair Corralation between First Asset and Harvest Healthcare
Assuming the 90 days trading horizon First Asset Tech is expected to generate 1.84 times more return on investment than Harvest Healthcare. However, First Asset is 1.84 times more volatile than Harvest Healthcare Leaders. It trades about 0.11 of its potential returns per unit of risk. Harvest Healthcare Leaders is currently generating about 0.04 per unit of risk. If you would invest 1,170 in First Asset Tech on August 26, 2024 and sell it today you would earn a total of 1,013 from holding First Asset Tech or generate 86.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Asset Tech vs. Harvest Healthcare Leaders
Performance |
| Timeline |
| First Asset Tech |
| Harvest Healthcare |
First Asset and Harvest Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and Harvest Healthcare
The main advantage of trading using opposite First Asset and Harvest Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset position performs unexpectedly, Harvest Healthcare 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 Healthcare will offset losses from the drop in Harvest Healthcare's long position.The idea behind First Asset Tech and Harvest Healthcare 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.| Harvest Healthcare vs. BMO Covered Call | Harvest Healthcare vs. First Asset Tech | Harvest Healthcare vs. Harvest Equal Weight | Harvest Healthcare 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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