Correlation Between First Trust and Harvest Healthcare
Can any of the company-specific risk be diversified away by investing in both First Trust and Harvest Healthcare 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 First Trust and Harvest Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and Harvest Healthcare Leaders, you can compare the effects of market volatilities on First Trust and Harvest Healthcare 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 First Trust with a short position of Harvest Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Harvest Healthcare.
Diversification Opportunities for First Trust and Harvest Healthcare
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Harvest is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Harvest Healthcare Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Healthcare and First Trust 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 First Trust Senior are associated (or correlated) with Harvest Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Healthcare has no effect on the direction of First Trust i.e., First Trust and Harvest Healthcare go up and down completely randomly.
Pair Corralation between First Trust and Harvest Healthcare
Assuming the 90 days trading horizon First Trust Senior is expected to generate 1.01 times more return on investment than Harvest Healthcare. However, First Trust is 1.01 times more volatile than Harvest Healthcare Leaders. It trades about 0.06 of its potential returns per unit of risk. Harvest Healthcare Leaders is currently generating about -0.26 per unit of risk. If you would invest 1,664 in First Trust Senior on September 15, 2024 and sell it today you would earn a total of 37.00 from holding First Trust Senior or generate 2.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Trust Senior vs. Harvest Healthcare Leaders
Performance |
Timeline |
First Trust Senior |
Harvest Healthcare |
First Trust and Harvest Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Trust and Harvest Healthcare
The main advantage of trading using opposite First Trust and Harvest Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Harvest Healthcare 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 Healthcare will offset losses from the drop in Harvest Healthcare's long position.First Trust vs. First Trust Global | First Trust vs. FT AlphaDEX Industrials | First Trust vs. First Trust Value | First Trust vs. Global X Active |
Harvest Healthcare vs. First Trust AlphaDEX | Harvest Healthcare vs. FT AlphaDEX Industrials | Harvest Healthcare vs. BMO SPTSX Equal | Harvest Healthcare vs. First Trust Senior |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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