Correlation Between Harvest Healthcare and Desjardins

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

By analyzing existing cross correlation between Harvest Healthcare Leaders and Desjardins RI Canada, you can compare the effects of market volatilities on Harvest Healthcare and Desjardins 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 Healthcare with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Healthcare and Desjardins.

Diversification Opportunities for Harvest Healthcare and Desjardins

-0.65

Correlation Coefficient

Harvest Healthcare  Desjardins

Excellent diversification

The 3 months correlation between Harvest and Desjardins is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Healthcare Leaders and Desjardins RI Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Canada and Harvest Healthcare 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 Healthcare Leaders are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Canada has no effect on the direction of Harvest Healthcare i.e., Harvest Healthcare and Desjardins go up and down completely randomly.

Pair Corralation between Harvest Healthcare and Desjardins

Assuming the 90 days trading horizon Harvest Healthcare is expected to generate 9.19 times less return on investment than Desjardins. In addition to that, Harvest Healthcare is 1.45 times more volatile than Desjardins RI Canada. It trades about 0.02 of its total potential returns per unit of risk. Desjardins RI Canada is currently generating about 0.32 per unit of volatility. If you would invest  3,248  in Desjardins RI Canada on September 8, 2024 and sell it today you would earn a total of  114.00  from holding Desjardins RI Canada or generate 3.51% return on investment over 90 days.

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

Harvest Healthcare Leaders  vs.  Desjardins RI Canada

Harvest Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harvest Healthcare Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Harvest Healthcare is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Desjardins RI Canada

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins RI Canada are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Desjardins displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harvest Healthcare and Desjardins

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

The idea behind Harvest Healthcare Leaders and Desjardins RI Canada 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.