Correlation Between Harvest Equal and Evolve NASDAQ

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

By analyzing existing cross correlation between Harvest Equal Weight and Evolve NASDAQ Technology, you can compare the effects of market volatilities on Harvest Equal and Evolve NASDAQ 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 Equal with a short position of Evolve NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Equal and Evolve NASDAQ.

Diversification Opportunities for Harvest Equal and Evolve NASDAQ

-0.15

Correlation Coefficient

Harvest Equal  Evolve NASDAQ

Good diversification

The 3 months correlation between Harvest and Evolve is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Equal Weight and Evolve NASDAQ Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve NASDAQ Technology and Harvest Equal 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 Equal Weight are associated (or correlated) with Evolve NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve NASDAQ Technology has no effect on the direction of Harvest Equal i.e., Harvest Equal and Evolve NASDAQ go up and down completely randomly.

Pair Corralation between Harvest Equal and Evolve NASDAQ

Assuming the 90 days trading horizon Harvest Equal is expected to generate 3.09 times less return on investment than Evolve NASDAQ. But when comparing it to its historical volatility, Harvest Equal Weight is 1.98 times less risky than Evolve NASDAQ. It trades about 0.06 of its potential returns per unit of risk. Evolve NASDAQ Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,989  in Evolve NASDAQ Technology on December 2, 2024 and sell it today you would earn a total of  1,322  from holding Evolve NASDAQ Technology or generate 66.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.27%
Values	Daily Returns

Harvest Equal Weight  vs.  Evolve NASDAQ Technology

Harvest Equal Weight

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Equal Weight are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Harvest Equal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Evolve NASDAQ Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve NASDAQ Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Evolve NASDAQ is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harvest Equal and Evolve NASDAQ

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

The idea behind Harvest Equal Weight and Evolve NASDAQ Technology 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.