Correlation Between Harvest Microsoft and Hamilton Enhanced

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

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

Diversification Opportunities for Harvest Microsoft and Hamilton Enhanced

0.73

Correlation Coefficient

Harvest Microsoft  Hamilton Enhanced

Poor diversification

The 3 months correlation between Harvest and Hamilton is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Microsoft Enhanced and Hamilton Enhanced Covered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Enhanced Covered and Harvest Microsoft 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 Microsoft Enhanced are associated (or correlated) with Hamilton Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Enhanced Covered has no effect on the direction of Harvest Microsoft i.e., Harvest Microsoft and Hamilton Enhanced go up and down completely randomly.

Pair Corralation between Harvest Microsoft and Hamilton Enhanced

Assuming the 90 days trading horizon Harvest Microsoft Enhanced is expected to generate 1.65 times more return on investment than Hamilton Enhanced. However, Harvest Microsoft is 1.65 times more volatile than Hamilton Enhanced Covered. It trades about 0.11 of its potential returns per unit of risk. Hamilton Enhanced Covered is currently generating about 0.15 per unit of risk. If you would invest  1,165  in Harvest Microsoft Enhanced on September 12, 2024 and sell it today you would earn a total of  111.00  from holding Harvest Microsoft Enhanced or generate 9.53% return on investment over 90 days.

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

Harvest Microsoft Enhanced  vs.  Hamilton Enhanced Covered

Harvest Microsoft

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Microsoft Enhanced are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Harvest Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hamilton Enhanced Covered

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Covered are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Enhanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harvest Microsoft and Hamilton Enhanced

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

The idea behind Harvest Microsoft Enhanced and Hamilton Enhanced Covered 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..