Correlation Between IShares Global and Harvest Global

Can any of the company-specific risk be diversified away by investing in both IShares Global and Harvest Global 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 Global and Harvest Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Global Real and Harvest Global REIT, you can compare the effects of market volatilities on IShares Global and Harvest Global 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 Global with a short position of Harvest Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Harvest Global.

Diversification Opportunities for IShares Global and Harvest Global

0.86

Correlation Coefficient

IShares Global  Harvest Global

Very poor diversification

The 3 months correlation between IShares and Harvest is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Real and Harvest Global REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Global REIT and IShares Global 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 Global Real are associated (or correlated) with Harvest Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Global REIT has no effect on the direction of IShares Global i.e., IShares Global and Harvest Global go up and down completely randomly.

Pair Corralation between IShares Global and Harvest Global

Assuming the 90 days trading horizon IShares Global is expected to generate 1.53 times less return on investment than Harvest Global. But when comparing it to its historical volatility, iShares Global Real is 1.04 times less risky than Harvest Global. It trades about 0.04 of its potential returns per unit of risk. Harvest Global REIT is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  579.00  in Harvest Global REIT on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Harvest Global REIT or generate 3.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares Global Real  vs.  Harvest Global REIT

iShares Global Real

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Real are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Harvest Global REIT

Risk-Adjusted Performance

Modest

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

Pair Trading with IShares Global and Harvest Global

The main advantage of trading using opposite IShares Global and Harvest Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, Harvest Global 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 Global will offset losses from the drop in Harvest Global's long position.

The idea behind iShares Global Real and Harvest Global REIT 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.