Correlation Between Dimensional Core and Harbor ETF

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

By analyzing existing cross correlation between Dimensional Core Equity and Harbor ETF Trust, you can compare the effects of market volatilities on Dimensional Core and Harbor ETF 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 Dimensional Core with a short position of Harbor ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and Harbor ETF.

Diversification Opportunities for Dimensional Core and Harbor ETF

0.56

Correlation Coefficient

Dimensional Core  Harbor ETF

Very weak diversification

The 3 months correlation between Dimensional and Harbor is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and Harbor ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor ETF Trust and Dimensional Core 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 Dimensional Core Equity are associated (or correlated) with Harbor ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor ETF Trust has no effect on the direction of Dimensional Core i.e., Dimensional Core and Harbor ETF go up and down completely randomly.

Pair Corralation between Dimensional Core and Harbor ETF

Given the investment horizon of 90 days Dimensional Core Equity is expected to generate 1.18 times more return on investment than Harbor ETF. However, Dimensional Core is 1.18 times more volatile than Harbor ETF Trust. It trades about 0.08 of its potential returns per unit of risk. Harbor ETF Trust is currently generating about 0.09 per unit of risk. If you would invest  3,202  in Dimensional Core Equity on September 29, 2024 and sell it today you would earn a total of  297.00  from holding Dimensional Core Equity or generate 9.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	43.65%
Values	Daily Returns

Dimensional Core Equity  vs.  Harbor ETF Trust

Dimensional Core Equity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Core Equity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Dimensional Core is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Harbor ETF Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Harbor ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dimensional Core and Harbor ETF

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

The idea behind Dimensional Core Equity and Harbor ETF Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.