Correlation Between Harvest Global and BMO Aggregate

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

Diversification Opportunities for Harvest Global and BMO Aggregate

0.23

Correlation Coefficient

Harvest Global  BMO Aggregate

Modest diversification

The 3 months correlation between Harvest and BMO is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Global REIT and BMO Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Aggregate Bond 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 BMO Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Aggregate Bond has no effect on the direction of Harvest Global i.e., Harvest Global and BMO Aggregate go up and down completely randomly.

Pair Corralation between Harvest Global and BMO Aggregate

Assuming the 90 days trading horizon Harvest Global REIT is expected to under-perform the BMO Aggregate. In addition to that, Harvest Global is 2.3 times more volatile than BMO Aggregate Bond. It trades about -0.13 of its total potential returns per unit of risk. BMO Aggregate Bond is currently generating about 0.02 per unit of volatility. If you would invest  1,397  in BMO Aggregate Bond on September 13, 2024 and sell it today you would earn a total of  7.00  from holding BMO Aggregate Bond or generate 0.5% return on investment over 90 days.

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

Harvest Global REIT  vs.  BMO Aggregate Bond

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 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.

BMO Aggregate Bond

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BMO Aggregate Bond are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, BMO Aggregate 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 Global and BMO Aggregate

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

The idea behind Harvest Global REIT and BMO Aggregate Bond 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.