Correlation Between Harvest Brand and Brompton Enhanced

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

By analyzing existing cross correlation between Harvest Brand Leaders and Brompton Enhanced Multi Asset, you can compare the effects of market volatilities on Harvest Brand and Brompton Enhanced 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 Harvest Brand with a short position of Brompton Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Brand and Brompton Enhanced.

Diversification Opportunities for Harvest Brand and Brompton Enhanced

-0.04

Correlation Coefficient

Harvest Brand  Brompton Enhanced

Good diversification

The 3 months correlation between Harvest and Brompton is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Brand Leaders and Brompton Enhanced Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Enhanced Multi and Harvest Brand 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 Harvest Brand Leaders are associated (or correlated) with Brompton Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Enhanced Multi has no effect on the direction of Harvest Brand i.e., Harvest Brand and Brompton Enhanced go up and down completely randomly.

Pair Corralation between Harvest Brand and Brompton Enhanced

Assuming the 90 days trading horizon Harvest Brand Leaders is expected to generate 0.79 times more return on investment than Brompton Enhanced. However, Harvest Brand Leaders is 1.27 times less risky than Brompton Enhanced. It trades about 0.17 of its potential returns per unit of risk. Brompton Enhanced Multi Asset is currently generating about 0.03 per unit of risk. If you would invest  1,146  in Harvest Brand Leaders on October 20, 2024 and sell it today you would earn a total of  73.00  from holding Harvest Brand Leaders or generate 6.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Harvest Brand Leaders  vs.  Brompton Enhanced Multi Asset

Harvest Brand Leaders

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Brand Leaders are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Harvest Brand is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Brompton Enhanced Multi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Enhanced Multi Asset are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brompton Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Harvest Brand and Brompton Enhanced

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

The idea behind Harvest Brand Leaders and Brompton Enhanced Multi Asset 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.