Correlation Between Harbor Health and EA Series

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

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

Diversification Opportunities for Harbor Health and EA Series

0.61

Correlation Coefficient

Harbor Health  EA Series

Poor diversification

The 3 months correlation between Harbor and DRLL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Health Care and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust and Harbor Health 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 Health Care are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Harbor Health i.e., Harbor Health and EA Series go up and down completely randomly.

Pair Corralation between Harbor Health and EA Series

Given the investment horizon of 90 days Harbor Health Care is expected to generate 0.88 times more return on investment than EA Series. However, Harbor Health Care is 1.13 times less risky than EA Series. It trades about 0.0 of its potential returns per unit of risk. EA Series Trust is currently generating about -0.06 per unit of risk. If you would invest  2,673  in Harbor Health Care on November 28, 2024 and sell it today you would lose (16.00) from holding Harbor Health Care or give up 0.6% of portfolio value over 90 days.

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

Harbor Health Care  vs.  EA Series Trust

Harbor Health Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harbor Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Harbor Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

EA Series Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Harbor Health and EA Series

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

The idea behind Harbor Health Care and EA Series 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.