Correlation Between IShares MSCI and Harbor Long

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

By analyzing existing cross correlation between iShares MSCI USA and Harbor Long Term Growers, you can compare the effects of market volatilities on IShares MSCI and Harbor Long 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 IShares MSCI with a short position of Harbor Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Harbor Long.

Diversification Opportunities for IShares MSCI and Harbor Long

0.86

Correlation Coefficient

IShares MSCI  Harbor Long

Very poor diversification

The 3 months correlation between IShares and Harbor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and Harbor Long Term Growers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Long Term and IShares MSCI 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 iShares MSCI USA are associated (or correlated) with Harbor Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Long Term has no effect on the direction of IShares MSCI i.e., IShares MSCI and Harbor Long go up and down completely randomly.

Pair Corralation between IShares MSCI and Harbor Long

Given the investment horizon of 90 days iShares MSCI USA is expected to generate 1.01 times more return on investment than Harbor Long. However, IShares MSCI is 1.01 times more volatile than Harbor Long Term Growers. It trades about -0.03 of its potential returns per unit of risk. Harbor Long Term Growers is currently generating about -0.12 per unit of risk. If you would invest  20,735  in iShares MSCI USA on December 29, 2024 and sell it today you would lose (649.00) from holding iShares MSCI USA or give up 3.13% of portfolio value over 90 days.

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

iShares MSCI USA  vs.  Harbor Long Term Growers

iShares MSCI USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Harbor Long Term

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harbor Long Term Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares MSCI and Harbor Long

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

The idea behind iShares MSCI USA and Harbor Long Term Growers 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.