Correlation Between Harbor Long and IShares Factors

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

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

Diversification Opportunities for Harbor Long and IShares Factors

0.79

Correlation Coefficient

Harbor Long  IShares Factors

Poor diversification

The 3 months correlation between Harbor and IShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Long Term Growers and iShares Factors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Factors Growth and Harbor Long 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 Long Term Growers are associated (or correlated) with IShares Factors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Factors Growth has no effect on the direction of Harbor Long i.e., Harbor Long and IShares Factors go up and down completely randomly.

Pair Corralation between Harbor Long and IShares Factors

Given the investment horizon of 90 days Harbor Long Term Growers is expected to generate 1.07 times more return on investment than IShares Factors. However, Harbor Long is 1.07 times more volatile than iShares Factors Growth. It trades about 0.13 of its potential returns per unit of risk. iShares Factors Growth is currently generating about 0.14 per unit of risk. If you would invest  1,356  in Harbor Long Term Growers on September 20, 2024 and sell it today you would earn a total of  1,375  from holding Harbor Long Term Growers or generate 101.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.38%
Values	Daily Returns

Harbor Long Term Growers  vs.  iShares Factors Growth

Harbor Long Term

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Long Term Growers are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Harbor Long may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Factors Growth

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days iShares Factors Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly abnormal essential indicators, IShares Factors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harbor Long and IShares Factors

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

The idea behind Harbor Long Term Growers and iShares Factors 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.