Correlation Between Harmony and GreenSky

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Can any of the company-specific risk be diversified away by investing in both Harmony and GreenSky 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 Harmony and GreenSky into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony and GreenSky, you can compare the effects of market volatilities on Harmony and GreenSky 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 Harmony with a short position of GreenSky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony and GreenSky.

Diversification Opportunities for Harmony and GreenSky

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Harmony and GreenSky is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Harmony and GreenSky Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenSky and Harmony 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 Harmony are associated (or correlated) with GreenSky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenSky has no effect on the direction of Harmony i.e., Harmony and GreenSky go up and down completely randomly.

Pair Corralation between Harmony and GreenSky

Assuming the 90 days trading horizon Harmony is expected to under-perform the GreenSky. In addition to that, Harmony is 1.87 times more volatile than GreenSky. It trades about -0.1 of its total potential returns per unit of risk. GreenSky is currently generating about 0.07 per unit of volatility. If you would invest  405.00  in GreenSky on February 20, 2022 and sell it today you would earn a total of  615.00  from holding GreenSky or generate 151.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy31.97%
ValuesDaily Returns

Harmony  vs.  GreenSky Inc

 Performance (%) 
      Timeline 
Harmony 
Harmony Performance
0 of 100
Over the last 90 days Harmony has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Harmony investors.

Harmony Price Channel

GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, GreenSky is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Harmony and GreenSky Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Harmony and GreenSky

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

GreenSky

Pair trading matchups for GreenSky

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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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