Correlation Between First Asset and Harvest Bank
Can any of the company-specific risk be diversified away by investing in both First Asset 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 First Asset and Harvest Bank 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 Bank Leaders, you can compare the effects of market volatilities on First Asset 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 First Asset with a short position of Harvest Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Asset and Harvest Bank.
Diversification Opportunities for First Asset and Harvest Bank
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Harvest is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Asset Tech 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 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 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 First Asset i.e., First Asset and Harvest Bank go up and down completely randomly.
Pair Corralation between First Asset and Harvest Bank
Assuming the 90 days trading horizon First Asset is expected to generate 1.05 times less return on investment than Harvest Bank. But when comparing it to its historical volatility, First Asset Tech is 1.08 times less risky than Harvest Bank. It trades about 0.09 of its potential returns per unit of risk. Harvest Bank Leaders is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 993.00 in Harvest Bank Leaders on September 12, 2024 and sell it today you would earn a total of 425.00 from holding Harvest Bank Leaders or generate 42.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Asset Tech vs. Harvest Bank Leaders
Performance |
| Timeline |
| First Asset Tech |
| Harvest Bank Leaders |
First Asset and Harvest Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Asset and Harvest Bank
The main advantage of trading using opposite First Asset and Harvest Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Asset 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.| First Asset vs. First Asset Energy | First Asset vs. CI Gold Giants | First Asset vs. Harvest Healthcare Leaders | First Asset vs. Hamilton Enhanced Multi Sector |
| Harvest Bank vs. iShares SPTSX Capped | Harvest Bank vs. iShares SPTSX Capped | Harvest Bank vs. iShares SPTSX Global | Harvest Bank vs. iShares SPTSX Capped |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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