Correlation Between Harmonic and Main International

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

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

Diversification Opportunities for Harmonic and Main International

0.26

Correlation Coefficient

Harmonic  Main International

Modest diversification

The 3 months correlation between Harmonic and Main is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Harmonic and Main International ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main International ETF and Harmonic 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 Harmonic are associated (or correlated) with Main International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main International ETF has no effect on the direction of Harmonic i.e., Harmonic and Main International go up and down completely randomly.

Pair Corralation between Harmonic and Main International

Given the investment horizon of 90 days Harmonic is expected to generate 1.25 times less return on investment than Main International. In addition to that, Harmonic is 3.66 times more volatile than Main International ETF. It trades about 0.01 of its total potential returns per unit of risk. Main International ETF is currently generating about 0.03 per unit of volatility. If you would invest  1,986  in Main International ETF on October 4, 2024 and sell it today you would earn a total of  217.00  from holding Main International ETF or generate 10.93% return on investment over 90 days.

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

Harmonic  vs.  Main International ETF

Harmonic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmonic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Harmonic is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Main International ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Main International ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Main International is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Harmonic and Main International

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

The idea behind Harmonic and Main International ETF 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.