Correlation Between Harbor ETF and IShares Trust

Can any of the company-specific risk be diversified away by investing in both Harbor ETF and IShares Trust 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 Trust 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 Trust, you can compare the effects of market volatilities on Harbor ETF and IShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor ETF and IShares Trust.

Diversification Opportunities for Harbor ETF and IShares Trust

0.64

Correlation Coefficient

Harbor ETF  IShares Trust

Poor diversification

The 3 months correlation between Harbor and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Harbor ETF Trust and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Harbor ETF i.e., Harbor ETF and IShares Trust go up and down completely randomly.

Pair Corralation between Harbor ETF and IShares Trust

Given the investment horizon of 90 days Harbor ETF Trust is expected to generate 104.57 times more return on investment than IShares Trust. However, Harbor ETF is 104.57 times more volatile than iShares Trust. It trades about 0.15 of its potential returns per unit of risk. iShares Trust is currently generating about 0.03 per unit of risk. If you would invest  2,020  in Harbor ETF Trust on September 27, 2024 and sell it today you would earn a total of  8,799  from holding Harbor ETF Trust or generate 435.59% return on investment over 90 days.

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

Harbor ETF Trust  vs.  iShares Trust

Harbor ETF Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Harbor ETF displayed solid returns over the last few months and may actually be approaching a breakup point.

iShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, IShares Trust is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Harbor ETF and IShares Trust

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

The idea behind Harbor ETF Trust and iShares 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.