Correlation Between Harbor ETF and IShares ESG

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

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

Diversification Opportunities for Harbor ETF and IShares ESG

0.38

Correlation Coefficient

Harbor ETF  IShares ESG

Weak diversification

The 3 months correlation between Harbor and IShares is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Harbor ETF Trust and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware and Harbor ETF 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 Harbor ETF Trust are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of Harbor ETF i.e., Harbor ETF and IShares ESG go up and down completely randomly.

Pair Corralation between Harbor ETF and IShares ESG

Given the investment horizon of 90 days Harbor ETF Trust is expected to generate 1.08 times more return on investment than IShares ESG. However, Harbor ETF is 1.08 times more volatile than iShares ESG Aware. It trades about 0.19 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.03 per unit of risk. If you would invest  1,895  in Harbor ETF Trust on December 21, 2024 and sell it today you would earn a total of  185.72  from holding Harbor ETF Trust or generate 9.8% return on investment over 90 days.

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

Harbor ETF Trust  vs.  iShares ESG Aware

Harbor ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Harbor ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares ESG Aware

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares ESG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Harbor ETF and IShares ESG

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

The idea behind Harbor ETF Trust and iShares ESG Aware 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.