Correlation Between Harbor Health and SPDR SP

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

Diversification Opportunities for Harbor Health and SPDR SP

-0.18

Correlation Coefficient

Harbor Health  SPDR SP

Good diversification

The 3 months correlation between Harbor and SPDR is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Health Care and SPDR SP Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Transportation 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Transportation has no effect on the direction of Harbor Health i.e., Harbor Health and SPDR SP go up and down completely randomly.

Pair Corralation between Harbor Health and SPDR SP

Given the investment horizon of 90 days Harbor Health Care is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Harbor Health Care is 1.35 times less risky than SPDR SP. The etf trades about -0.1 of its potential returns per unit of risk. The SPDR SP Transportation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,119  in SPDR SP Transportation on October 24, 2024 and sell it today you would earn a total of  1,062  from holding SPDR SP Transportation or generate 13.08% return on investment over 90 days.

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

Harbor Health Care  vs.  SPDR SP Transportation

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.

SPDR SP Transportation

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Transportation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Harbor Health and SPDR SP

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

The idea behind Harbor Health Care and SPDR SP Transportation 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..