Correlation Between RBC European and Harvest Tech

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

By analyzing existing cross correlation between RBC European Mid Cap and Harvest Tech Achievers, you can compare the effects of market volatilities on RBC European and Harvest Tech 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 RBC European with a short position of Harvest Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC European and Harvest Tech.

Diversification Opportunities for RBC European and Harvest Tech

-0.47

Correlation Coefficient

RBC European  Harvest Tech

Very good diversification

The 3 months correlation between RBC and Harvest is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding RBC European Mid Cap and Harvest Tech Achievers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Tech Achievers and RBC European 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 RBC European Mid Cap are associated (or correlated) with Harvest Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Tech Achievers has no effect on the direction of RBC European i.e., RBC European and Harvest Tech go up and down completely randomly.

Pair Corralation between RBC European and Harvest Tech

Assuming the 90 days trading horizon RBC European Mid Cap is expected to under-perform the Harvest Tech. But the fund apears to be less risky and, when comparing its historical volatility, RBC European Mid Cap is 1.85 times less risky than Harvest Tech. The fund trades about -0.06 of its potential returns per unit of risk. The Harvest Tech Achievers is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,555  in Harvest Tech Achievers on September 4, 2024 and sell it today you would earn a total of  210.00  from holding Harvest Tech Achievers or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

RBC European Mid Cap  vs.  Harvest Tech Achievers

RBC European Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC European Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, RBC European is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Harvest Tech Achievers

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Tech Achievers are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Harvest Tech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC European and Harvest Tech

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

The idea behind RBC European Mid Cap and Harvest Tech Achievers 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.