Correlation Between Harvest Brand and Invesco SPTSX

Can any of the company-specific risk be diversified away by investing in both Harvest Brand and Invesco SPTSX 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 Invesco SPTSX 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 Invesco SPTSX Composite, you can compare the effects of market volatilities on Harvest Brand and Invesco SPTSX 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 Invesco SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Brand and Invesco SPTSX.

Diversification Opportunities for Harvest Brand and Invesco SPTSX

-0.1

Correlation Coefficient

Harvest Brand  Invesco SPTSX

Good diversification

The 3 months correlation between Harvest and Invesco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Brand Leaders and Invesco SPTSX Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SPTSX Composite 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 Invesco SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SPTSX Composite has no effect on the direction of Harvest Brand i.e., Harvest Brand and Invesco SPTSX go up and down completely randomly.

Pair Corralation between Harvest Brand and Invesco SPTSX

Assuming the 90 days trading horizon Harvest Brand Leaders is expected to generate 1.09 times more return on investment than Invesco SPTSX. However, Harvest Brand is 1.09 times more volatile than Invesco SPTSX Composite. It trades about 0.12 of its potential returns per unit of risk. Invesco SPTSX Composite is currently generating about 0.1 per unit of risk. If you would invest  1,185  in Harvest Brand Leaders on December 2, 2024 and sell it today you would earn a total of  33.00  from holding Harvest Brand Leaders or generate 2.78% return on investment over 90 days.

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

Harvest Brand Leaders  vs.  Invesco SPTSX Composite

Harvest Brand Leaders

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Brand Leaders are ranked lower than 10 (%) 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.

Invesco SPTSX Composite

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco SPTSX Composite has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Invesco SPTSX 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 Invesco SPTSX

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

The idea behind Harvest Brand Leaders and Invesco SPTSX Composite 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.