Correlation Between Harvest Brand and Global X

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

Diversification Opportunities for Harvest Brand and Global X

0.68

Correlation Coefficient

Harvest Brand  Global X

Poor diversification

The 3 months correlation between Harvest and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Brand Leaders and Global X Pipelines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Pipelines 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Pipelines has no effect on the direction of Harvest Brand i.e., Harvest Brand and Global X go up and down completely randomly.

Pair Corralation between Harvest Brand and Global X

Assuming the 90 days trading horizon Harvest Brand Leaders is expected to generate 0.56 times more return on investment than Global X. However, Harvest Brand Leaders is 1.8 times less risky than Global X. It trades about -0.03 of its potential returns per unit of risk. Global X Pipelines is currently generating about -0.16 per unit of risk. If you would invest  1,015  in Harvest Brand Leaders on September 22, 2024 and sell it today you would lose (4.00) from holding Harvest Brand Leaders or give up 0.39% of portfolio value over 90 days.

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

Harvest Brand Leaders  vs.  Global X Pipelines

Harvest Brand Leaders

Risk-Adjusted Performance

2 of 100

Weak

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

Global X Pipelines

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Pipelines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harvest Brand and Global X

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

The idea behind Harvest Brand Leaders and Global X Pipelines 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.