Correlation Between Maryland Tax-free and Harbor Strategic

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

By analyzing existing cross correlation between Maryland Tax Free Bond and Harbor Strategic Growth, you can compare the effects of market volatilities on Maryland Tax-free and Harbor Strategic 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 Maryland Tax-free with a short position of Harbor Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maryland Tax-free and Harbor Strategic.

Diversification Opportunities for Maryland Tax-free and Harbor Strategic

-0.31

Correlation Coefficient

Maryland Tax-free  Harbor Strategic

Very good diversification

The 3 months correlation between Maryland and Harbor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Tax Free Bond and Harbor Strategic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Strategic Growth and Maryland Tax-free 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 Maryland Tax Free Bond are associated (or correlated) with Harbor Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Strategic Growth has no effect on the direction of Maryland Tax-free i.e., Maryland Tax-free and Harbor Strategic go up and down completely randomly.

Pair Corralation between Maryland Tax-free and Harbor Strategic

Assuming the 90 days horizon Maryland Tax Free Bond is expected to under-perform the Harbor Strategic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Maryland Tax Free Bond is 2.77 times less risky than Harbor Strategic. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Harbor Strategic Growth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,808  in Harbor Strategic Growth on December 30, 2024 and sell it today you would earn a total of  14.00  from holding Harbor Strategic Growth or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.74%
Values	Daily Returns

Maryland Tax Free Bond  vs.  Harbor Strategic Growth

Maryland Tax Free

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maryland Tax Free Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Maryland Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbor Strategic Growth

Risk-Adjusted Performance

Weak

Over the last 90 days Harbor Strategic Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Harbor Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maryland Tax-free and Harbor Strategic

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

The idea behind Maryland Tax Free Bond and Harbor Strategic Growth 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.