Correlation Between BMO Global and Harvest Global

Can any of the company-specific risk be diversified away by investing in both BMO 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 BMO 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 BMO Global Consumer and Harvest Global REIT, you can compare the effects of market volatilities on BMO 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 BMO Global with a short position of Harvest Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Global and Harvest Global.

Diversification Opportunities for BMO Global and Harvest Global

-0.19

Correlation Coefficient

BMO Global  Harvest Global

Good diversification

The 3 months correlation between BMO and Harvest is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BMO Global Consumer 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 BMO 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 BMO Global Consumer 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 BMO Global i.e., BMO Global and Harvest Global go up and down completely randomly.

Pair Corralation between BMO Global and Harvest Global

Assuming the 90 days trading horizon BMO Global Consumer is expected to under-perform the Harvest Global. In addition to that, BMO Global is 1.25 times more volatile than Harvest Global REIT. It trades about -0.1 of its total potential returns per unit of risk. Harvest Global REIT is currently generating about 0.04 per unit of volatility. If you would invest  581.00  in Harvest Global REIT on December 23, 2024 and sell it today you would earn a total of  13.00  from holding Harvest Global REIT or generate 2.24% return on investment over 90 days.

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

BMO Global Consumer  vs.  Harvest Global REIT

BMO Global Consumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days BMO Global Consumer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Harvest Global REIT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Global REIT are ranked lower than 3 (%) 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 BMO Global and Harvest Global

The main advantage of trading using opposite BMO Global and Harvest Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO 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 BMO Global Consumer 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.