Correlation Between Harvest Healthcare and First Trust
Can any of the company-specific risk be diversified away by investing in both Harvest Healthcare and First Trust 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 Healthcare and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harvest Healthcare Leaders and First Trust NASDAQ, you can compare the effects of market volatilities on Harvest Healthcare and First Trust 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 Healthcare with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Healthcare and First Trust.
Diversification Opportunities for Harvest Healthcare and First Trust
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Harvest and First is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Healthcare Leaders and First Trust NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ and Harvest Healthcare 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 Healthcare Leaders are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust NASDAQ has no effect on the direction of Harvest Healthcare i.e., Harvest Healthcare and First Trust go up and down completely randomly.
Pair Corralation between Harvest Healthcare and First Trust
Assuming the 90 days trading horizon Harvest Healthcare Leaders is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Harvest Healthcare Leaders is 2.14 times less risky than First Trust. The etf trades about -0.08 of its potential returns per unit of risk. The First Trust NASDAQ is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,607 in First Trust NASDAQ on October 3, 2024 and sell it today you would earn a total of 780.00 from holding First Trust NASDAQ or generate 16.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 96.77% |
Values | Daily Returns |
Harvest Healthcare Leaders vs. First Trust NASDAQ
Performance |
Timeline |
Harvest Healthcare |
First Trust NASDAQ |
Harvest Healthcare and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harvest Healthcare and First Trust
The main advantage of trading using opposite Harvest Healthcare and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Healthcare position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.Harvest Healthcare vs. Harvest Premium Yield | Harvest Healthcare vs. Harvest Balanced Income | Harvest Healthcare vs. Harvest Energy Leaders | Harvest Healthcare vs. Harvest Eli Lilly |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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