Correlation Between IShares Core and Harvest Diversified

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

By analyzing existing cross correlation between iShares Core Growth and Harvest Diversified Monthly, you can compare the effects of market volatilities on IShares Core and Harvest Diversified 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 IShares Core with a short position of Harvest Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Harvest Diversified.

Diversification Opportunities for IShares Core and Harvest Diversified

0.94

Correlation Coefficient

IShares Core  Harvest Diversified

Almost no diversification

The 3 months correlation between IShares and Harvest is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Growth and Harvest Diversified Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Diversified and IShares Core 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 iShares Core Growth are associated (or correlated) with Harvest Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Diversified has no effect on the direction of IShares Core i.e., IShares Core and Harvest Diversified go up and down completely randomly.

Pair Corralation between IShares Core and Harvest Diversified

Assuming the 90 days trading horizon iShares Core Growth is expected to generate 0.62 times more return on investment than Harvest Diversified. However, iShares Core Growth is 1.62 times less risky than Harvest Diversified. It trades about 0.24 of its potential returns per unit of risk. Harvest Diversified Monthly is currently generating about 0.14 per unit of risk. If you would invest  2,916  in iShares Core Growth on September 15, 2024 and sell it today you would earn a total of  193.00  from holding iShares Core Growth or generate 6.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

iShares Core Growth  vs.  Harvest Diversified Monthly

iShares Core Growth

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Growth are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Harvest Diversified

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Diversified Monthly are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Harvest Diversified is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and Harvest Diversified

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

The idea behind iShares Core Growth and Harvest Diversified Monthly 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.