Correlation Between Harvest Energy and First Asset
Can any of the company-specific risk be diversified away by investing in both Harvest Energy and First Asset 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 Energy and First Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harvest Energy Leaders and First Asset Energy, you can compare the effects of market volatilities on Harvest Energy and First Asset 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 Energy with a short position of First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Energy and First Asset.
Diversification Opportunities for Harvest Energy and First Asset
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harvest and First is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Energy Leaders and First Asset Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Energy and Harvest Energy 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 Energy Leaders are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Energy has no effect on the direction of Harvest Energy i.e., Harvest Energy and First Asset go up and down completely randomly.
Pair Corralation between Harvest Energy and First Asset
Assuming the 90 days trading horizon Harvest Energy is expected to generate 1.07 times less return on investment than First Asset. In addition to that, Harvest Energy is 1.19 times more volatile than First Asset Energy. It trades about 0.11 of its total potential returns per unit of risk. First Asset Energy is currently generating about 0.14 per unit of volatility. If you would invest 516.00 in First Asset Energy on December 30, 2024 and sell it today you would earn a total of 52.00 from holding First Asset Energy or generate 10.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 76.56% |
Values | Daily Returns |
Harvest Energy Leaders vs. First Asset Energy
Performance |
Timeline |
Harvest Energy Leaders |
First Asset Energy |
Harvest Energy and First Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harvest Energy and First Asset
The main advantage of trading using opposite Harvest Energy and First Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Energy position performs unexpectedly, First Asset 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 Asset will offset losses from the drop in First Asset's long position.Harvest Energy vs. Harvest Premium Yield | Harvest Energy vs. Harvest Balanced Income | Harvest Energy vs. Harvest Coinbase Enhanced | Harvest Energy vs. Harvest MicroStrategy Enhanced |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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