Correlation Between Global X and Harbor Health

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

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

Diversification Opportunities for Global X and Harbor Health

-0.26

Correlation Coefficient

Global X  Harbor Health

Very good diversification

The 3 months correlation between Global and Harbor is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global X MLP and Harbor Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Health Care and Global X 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 Global X MLP are associated (or correlated) with Harbor Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Health Care has no effect on the direction of Global X i.e., Global X and Harbor Health go up and down completely randomly.

Pair Corralation between Global X and Harbor Health

Given the investment horizon of 90 days Global X MLP is expected to generate 0.89 times more return on investment than Harbor Health. However, Global X MLP is 1.12 times less risky than Harbor Health. It trades about 0.43 of its potential returns per unit of risk. Harbor Health Care is currently generating about 0.15 per unit of risk. If you would invest  6,061  in Global X MLP on October 25, 2024 and sell it today you would earn a total of  528.00  from holding Global X MLP or generate 8.71% return on investment over 90 days.

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

Global X MLP  vs.  Harbor Health Care

Global X MLP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MLP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Global X and Harbor Health

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

The idea behind Global X MLP and Harbor Health Care 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.