Correlation Between MicroSectors FANG and Harbor ETF

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

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

Diversification Opportunities for MicroSectors FANG and Harbor ETF

0.0

Correlation Coefficient

MicroSectors FANG  Harbor ETF

Pay attention - limited upside

The 3 months correlation between MicroSectors and Harbor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index 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 MicroSectors FANG 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 MicroSectors FANG Index 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 MicroSectors FANG i.e., MicroSectors FANG and Harbor ETF go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Harbor ETF

Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the Harbor ETF. In addition to that, MicroSectors FANG is 5.36 times more volatile than Harbor ETF Trust. It trades about -0.09 of its total potential returns per unit of risk. Harbor ETF Trust is currently generating about 0.02 per unit of volatility. If you would invest  1,829  in Harbor ETF Trust on December 30, 2024 and sell it today you would earn a total of  14.00  from holding Harbor ETF Trust or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

MicroSectors FANG Index  vs.  Harbor ETF Trust

MicroSectors FANG Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Harbor ETF Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Harbor ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MicroSectors FANG and Harbor ETF

The main advantage of trading using opposite MicroSectors FANG and Harbor ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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 MicroSectors FANG Index 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.