Correlation Between Global X and Harvest Clean

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

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

Diversification Opportunities for Global X and Harvest Clean

-0.44

Correlation Coefficient

Global X  Harvest Clean

Very good diversification

The 3 months correlation between Global and Harvest is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global X Big and Harvest Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Clean Energy and Global X 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 Global X Big are associated (or correlated) with Harvest Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Clean Energy has no effect on the direction of Global X i.e., Global X and Harvest Clean go up and down completely randomly.

Pair Corralation between Global X and Harvest Clean

Assuming the 90 days trading horizon Global X Big is expected to generate 1.97 times more return on investment than Harvest Clean. However, Global X is 1.97 times more volatile than Harvest Clean Energy. It trades about 0.09 of its potential returns per unit of risk. Harvest Clean Energy is currently generating about -0.11 per unit of risk. If you would invest  2,935  in Global X Big on October 24, 2024 and sell it today you would earn a total of  404.00  from holding Global X Big or generate 13.76% return on investment over 90 days.

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

Global X Big  vs.  Harvest Clean Energy

Global X Big

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Big are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

Harvest Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harvest Clean Energy 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.

Pair Trading with Global X and Harvest Clean

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

The idea behind Global X Big and Harvest Clean Energy 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.