Correlation Between Harvest Balanced and Harvest Premium

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

By analyzing existing cross correlation between Harvest Balanced Income and Harvest Premium Yield, you can compare the effects of market volatilities on Harvest Balanced and Harvest Premium 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 Balanced with a short position of Harvest Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Balanced and Harvest Premium.

Diversification Opportunities for Harvest Balanced and Harvest Premium

-0.14

Correlation Coefficient

Harvest Balanced  Harvest Premium

Good diversification

The 3 months correlation between Harvest and Harvest is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Balanced Income and Harvest Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Premium Yield and Harvest Balanced 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 Balanced Income are associated (or correlated) with Harvest Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Premium Yield has no effect on the direction of Harvest Balanced i.e., Harvest Balanced and Harvest Premium go up and down completely randomly.

Pair Corralation between Harvest Balanced and Harvest Premium

Assuming the 90 days trading horizon Harvest Balanced Income is expected to generate 0.91 times more return on investment than Harvest Premium. However, Harvest Balanced Income is 1.1 times less risky than Harvest Premium. It trades about 0.04 of its potential returns per unit of risk. Harvest Premium Yield is currently generating about -0.08 per unit of risk. If you would invest  2,324  in Harvest Balanced Income on April 3, 2025 and sell it today you would earn a total of  44.00  from holding Harvest Balanced Income or generate 1.89% return on investment over 90 days.

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

Harvest Balanced Income  vs.  Harvest Premium Yield

Harvest Balanced Income

Risk-Adjusted Performance

Insignificant

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

Harvest Premium Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harvest Premium Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Harvest Premium is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Harvest Balanced and Harvest Premium

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

The idea behind Harvest Balanced Income and Harvest Premium Yield 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.