Correlation Between Vanguard and Harvest Clean
Can any of the company-specific risk be diversified away by investing in both Vanguard and Harvest Clean 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 Vanguard and Harvest Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and Harvest Clean Energy, you can compare the effects of market volatilities on Vanguard and Harvest Clean 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 Vanguard with a short position of Harvest Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Harvest Clean.
Diversification Opportunities for Vanguard and Harvest Clean
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Harvest is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Harvest Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Clean Energy and Vanguard 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 Vanguard SP 500 are associated (or correlated) with Harvest Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Clean Energy has no effect on the direction of Vanguard i.e., Vanguard and Harvest Clean go up and down completely randomly.
Pair Corralation between Vanguard and Harvest Clean
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 0.46 times more return on investment than Harvest Clean. However, Vanguard SP 500 is 2.16 times less risky than Harvest Clean. It trades about 0.16 of its potential returns per unit of risk. Harvest Clean Energy is currently generating about -0.07 per unit of risk. If you would invest 10,446 in Vanguard SP 500 on September 12, 2024 and sell it today you would earn a total of 4,755 from holding Vanguard SP 500 or generate 45.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. Harvest Clean Energy
Performance |
| Timeline |
| Vanguard SP 500 |
| Harvest Clean Energy |
Vanguard and Harvest Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Harvest Clean
The main advantage of trading using opposite Vanguard and Harvest Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Harvest Clean 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 Clean will offset losses from the drop in Harvest Clean's long position.| Vanguard vs. Vanguard FTSE Canadian | Vanguard vs. Vanguard Growth Portfolio | Vanguard vs. Vanguard SP 500 | Vanguard vs. Vanguard FTSE Canada |
| Harvest Clean vs. BMO Clean Energy | Harvest Clean vs. First Trust Nasdaq | Harvest Clean vs. BMO Aggregate Bond | Harvest Clean vs. iShares Canadian HYBrid |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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