Correlation Between IShares GSCI and Harbor All

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

By analyzing existing cross correlation between iShares GSCI Commodity and Harbor All Weather Inflation, you can compare the effects of market volatilities on IShares GSCI and Harbor All 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 GSCI with a short position of Harbor All. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares GSCI and Harbor All.

Diversification Opportunities for IShares GSCI and Harbor All

0.91

Correlation Coefficient

IShares GSCI  Harbor All

Almost no diversification

The 3 months correlation between IShares and Harbor is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares GSCI Commodity and Harbor All Weather Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor All Weather and IShares GSCI 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 GSCI Commodity are associated (or correlated) with Harbor All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor All Weather has no effect on the direction of IShares GSCI i.e., IShares GSCI and Harbor All go up and down completely randomly.

Pair Corralation between IShares GSCI and Harbor All

Given the investment horizon of 90 days IShares GSCI is expected to generate 1.37 times less return on investment than Harbor All. In addition to that, IShares GSCI is 1.31 times more volatile than Harbor All Weather Inflation. It trades about 0.04 of its total potential returns per unit of risk. Harbor All Weather Inflation is currently generating about 0.07 per unit of volatility. If you would invest  2,176  in Harbor All Weather Inflation on September 2, 2024 and sell it today you would earn a total of  74.00  from holding Harbor All Weather Inflation or generate 3.4% return on investment over 90 days.

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

iShares GSCI Commodity  vs.  Harbor All Weather Inflation

iShares GSCI Commodity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares GSCI Commodity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, IShares GSCI is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Harbor All Weather

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor All Weather Inflation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Harbor All is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares GSCI and Harbor All

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

The idea behind iShares GSCI Commodity and Harbor All Weather Inflation 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.