Correlation Between Harvest Equal and Global X

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

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

Diversification Opportunities for Harvest Equal and Global X

0.76

Correlation Coefficient

Harvest Equal  Global X

Poor diversification

The 3 months correlation between Harvest and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Equal Weight and Global X Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Enhanced and Harvest Equal 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 Equal Weight are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Enhanced has no effect on the direction of Harvest Equal i.e., Harvest Equal and Global X go up and down completely randomly.

Pair Corralation between Harvest Equal and Global X

Assuming the 90 days trading horizon Harvest Equal is expected to generate 2.09 times less return on investment than Global X. But when comparing it to its historical volatility, Harvest Equal Weight is 2.45 times less risky than Global X. It trades about 0.05 of its potential returns per unit of risk. Global X Enhanced is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,569  in Global X Enhanced on September 12, 2024 and sell it today you would earn a total of  443.00  from holding Global X Enhanced or generate 28.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	73.08%
Values	Daily Returns

Harvest Equal Weight  vs.  Global X Enhanced

Harvest Equal Weight

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Equal Weight are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Harvest Equal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X Enhanced

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Enhanced are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harvest Equal and Global X

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

The idea behind Harvest Equal Weight and Global X Enhanced 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.