Correlation Between Xtrackers MSCI and Harbor ETF

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

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

Diversification Opportunities for Xtrackers MSCI and Harbor ETF

0.9

Correlation Coefficient

Xtrackers MSCI  Harbor ETF

Almost no diversification

The 3 months correlation between Xtrackers and Harbor is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging 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 Xtrackers MSCI 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 Xtrackers MSCI Emerging 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 Xtrackers MSCI i.e., Xtrackers MSCI and Harbor ETF go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Harbor ETF

Given the investment horizon of 90 days Xtrackers MSCI is expected to generate 1.25 times less return on investment than Harbor ETF. In addition to that, Xtrackers MSCI is 1.48 times more volatile than Harbor ETF Trust. It trades about 0.11 of its total potential returns per unit of risk. Harbor ETF Trust is currently generating about 0.21 per unit of volatility. If you would invest  1,895  in Harbor ETF Trust on December 22, 2024 and sell it today you would earn a total of  203.00  from holding Harbor ETF Trust or generate 10.71% return on investment over 90 days.

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

Xtrackers MSCI Emerging  vs.  Harbor ETF Trust

Xtrackers MSCI Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Emerging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Xtrackers MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Harbor ETF Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 16 (%) 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.

Pair Trading with Xtrackers MSCI and Harbor ETF

The main advantage of trading using opposite Xtrackers MSCI and Harbor ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI 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 Xtrackers MSCI Emerging 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.