Correlation Between Hamilton Enhanced and Harvest Microsoft

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

By analyzing existing cross correlation between Hamilton Enhanced Covered and Harvest Microsoft Enhanced, you can compare the effects of market volatilities on Hamilton Enhanced and Harvest Microsoft 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 Hamilton Enhanced with a short position of Harvest Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Enhanced and Harvest Microsoft.

Diversification Opportunities for Hamilton Enhanced and Harvest Microsoft

0.75

Correlation Coefficient

Hamilton Enhanced  Harvest Microsoft

Poor diversification

The 3 months correlation between Hamilton and Harvest is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Enhanced Covered and Harvest Microsoft Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Microsoft and Hamilton Enhanced 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 Hamilton Enhanced Covered are associated (or correlated) with Harvest Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Microsoft has no effect on the direction of Hamilton Enhanced i.e., Hamilton Enhanced and Harvest Microsoft go up and down completely randomly.

Pair Corralation between Hamilton Enhanced and Harvest Microsoft

Assuming the 90 days trading horizon Hamilton Enhanced Covered is expected to generate 0.74 times more return on investment than Harvest Microsoft. However, Hamilton Enhanced Covered is 1.35 times less risky than Harvest Microsoft. It trades about -0.08 of its potential returns per unit of risk. Harvest Microsoft Enhanced is currently generating about -0.12 per unit of risk. If you would invest  1,351  in Hamilton Enhanced Covered on December 29, 2024 and sell it today you would lose (84.00) from holding Hamilton Enhanced Covered or give up 6.22% of portfolio value over 90 days.

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

Hamilton Enhanced Covered  vs.  Harvest Microsoft Enhanced

Hamilton Enhanced Covered

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hamilton Enhanced Covered has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Hamilton Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Harvest Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harvest Microsoft Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Hamilton Enhanced and Harvest Microsoft

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

The idea behind Hamilton Enhanced Covered and Harvest Microsoft Enhanced 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.