Correlation Between Harvest Global and Brompton Split

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

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

Diversification Opportunities for Harvest Global and Brompton Split

-0.51

Correlation Coefficient

Harvest Global  Brompton Split

Excellent diversification

The 3 months correlation between Harvest and Brompton is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Global REIT and Brompton Split Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Split Banc and Harvest 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 Harvest Global REIT are associated (or correlated) with Brompton Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Split Banc has no effect on the direction of Harvest Global i.e., Harvest Global and Brompton Split go up and down completely randomly.

Pair Corralation between Harvest Global and Brompton Split

Assuming the 90 days trading horizon Harvest Global REIT is expected to under-perform the Brompton Split. But the etf apears to be less risky and, when comparing its historical volatility, Harvest Global REIT is 1.13 times less risky than Brompton Split. The etf trades about -0.03 of its potential returns per unit of risk. The Brompton Split Banc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  911.00  in Brompton Split Banc on September 4, 2024 and sell it today you would earn a total of  147.00  from holding Brompton Split Banc or generate 16.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Harvest Global REIT  vs.  Brompton Split Banc

Harvest Global REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harvest Global REIT has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Brompton Split Banc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Split Banc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Brompton Split displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harvest Global and Brompton Split

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

The idea behind Harvest Global REIT and Brompton Split Banc 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.