Correlation Between Harvest Global and Western Investment

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

Diversification Opportunities for Harvest Global and Western Investment

-0.03

Correlation Coefficient

Harvest Global  Western Investment

Good diversification

The 3 months correlation between Harvest and Western is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Global REIT and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment 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 Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Harvest Global i.e., Harvest Global and Western Investment go up and down completely randomly.

Pair Corralation between Harvest Global and Western Investment

Assuming the 90 days trading horizon Harvest Global REIT is expected to generate 0.31 times more return on investment than Western Investment. However, Harvest Global REIT is 3.21 times less risky than Western Investment. It trades about 0.06 of its potential returns per unit of risk. Western Investment is currently generating about -0.01 per unit of risk. If you would invest  579.00  in Harvest Global REIT on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Harvest Global REIT or generate 3.45% return on investment over 90 days.

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

Harvest Global REIT  vs.  Western Investment

Harvest Global REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Global REIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Western Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Western Investment is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Harvest Global and Western Investment

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

The idea behind Harvest Global REIT and Western Investment 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.