Correlation Between Harbor Health and Tradr 2X

Can any of the company-specific risk be diversified away by investing in both Harbor Health and Tradr 2X 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 Tradr 2X 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 Tradr 2X Long, you can compare the effects of market volatilities on Harbor Health and Tradr 2X 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 Tradr 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Health and Tradr 2X.

Diversification Opportunities for Harbor Health and Tradr 2X

0.39

Correlation Coefficient

Harbor Health  Tradr 2X

Weak diversification

The 3 months correlation between Harbor and Tradr is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Health Care and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long 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 Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of Harbor Health i.e., Harbor Health and Tradr 2X go up and down completely randomly.

Pair Corralation between Harbor Health and Tradr 2X

Given the investment horizon of 90 days Harbor Health is expected to generate 1.74 times less return on investment than Tradr 2X. But when comparing it to its historical volatility, Harbor Health Care is 2.33 times less risky than Tradr 2X. It trades about 0.06 of its potential returns per unit of risk. Tradr 2X Long is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,155  in Tradr 2X Long on December 28, 2024 and sell it today you would earn a total of  81.00  from holding Tradr 2X Long or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	68.85%
Values	Daily Returns

Harbor Health Care  vs.  Tradr 2X Long

Harbor Health Care

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Health Care are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Tradr 2X Long

Risk-Adjusted Performance

Insignificant

Over the last 90 days Tradr 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very abnormal basic indicators, Tradr 2X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Harbor Health and Tradr 2X

The main advantage of trading using opposite Harbor Health and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Health position performs unexpectedly, Tradr 2X 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 Tradr 2X will offset losses from the drop in Tradr 2X's long position.

The idea behind Harbor Health Care and Tradr 2X Long 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.