Correlation Between Harbor Health and IShares Global

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

Diversification Opportunities for Harbor Health and IShares Global

0.82

Correlation Coefficient

Harbor Health  IShares Global

Very poor diversification

The 3 months correlation between Harbor and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Health Care and iShares Global Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Timber 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Timber has no effect on the direction of Harbor Health i.e., Harbor Health and IShares Global go up and down completely randomly.

Pair Corralation between Harbor Health and IShares Global

Given the investment horizon of 90 days Harbor Health is expected to generate 25.54 times less return on investment than IShares Global. In addition to that, Harbor Health is 1.26 times more volatile than iShares Global Timber. It trades about 0.01 of its total potential returns per unit of risk. iShares Global Timber is currently generating about 0.29 per unit of volatility. If you would invest  7,638  in iShares Global Timber on October 24, 2024 and sell it today you would earn a total of  343.00  from holding iShares Global Timber or generate 4.49% return on investment over 90 days.

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

Harbor Health Care  vs.  iShares Global Timber

Harbor Health Care

Risk-Adjusted Performance

0 of 100

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.

iShares Global Timber

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Harbor Health and IShares Global

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

The idea behind Harbor Health Care and iShares Global Timber 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.