Correlation Between IShares SPTSX and Harvest Equal
Can any of the company-specific risk be diversified away by investing in both IShares SPTSX and Harvest Equal 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 IShares SPTSX and Harvest Equal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SPTSX Capped and Harvest Equal Weight, you can compare the effects of market volatilities on IShares SPTSX and Harvest Equal 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 IShares SPTSX with a short position of Harvest Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SPTSX and Harvest Equal.
Diversification Opportunities for IShares SPTSX and Harvest Equal
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Harvest is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares SPTSX Capped and Harvest Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Equal Weight and IShares SPTSX 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 iShares SPTSX Capped are associated (or correlated) with Harvest Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Equal Weight has no effect on the direction of IShares SPTSX i.e., IShares SPTSX and Harvest Equal go up and down completely randomly.
Pair Corralation between IShares SPTSX and Harvest Equal
Assuming the 90 days trading horizon iShares SPTSX Capped is expected to generate 2.39 times more return on investment than Harvest Equal. However, IShares SPTSX is 2.39 times more volatile than Harvest Equal Weight. It trades about 0.27 of its potential returns per unit of risk. Harvest Equal Weight is currently generating about 0.13 per unit of risk. If you would invest 5,807 in iShares SPTSX Capped on August 30, 2024 and sell it today you would earn a total of 1,113 from holding iShares SPTSX Capped or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SPTSX Capped vs. Harvest Equal Weight
Performance |
| Timeline |
| iShares SPTSX Capped |
| Harvest Equal Weight |
IShares SPTSX and Harvest Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SPTSX and Harvest Equal
The main advantage of trading using opposite IShares SPTSX and Harvest Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SPTSX position performs unexpectedly, Harvest Equal 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 Equal will offset losses from the drop in Harvest Equal's long position.| IShares SPTSX vs. BMO Covered Call | IShares SPTSX vs. BMO Canadian High | IShares SPTSX vs. BMO Europe High | IShares SPTSX vs. Harvest Healthcare Leaders |
| Harvest Equal vs. BMO Covered Call | Harvest Equal vs. BMO Canadian High | Harvest Equal vs. BMO Europe High | Harvest Equal vs. Harvest Healthcare Leaders |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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