Correlation Between Invesco NASDAQ and Harbor Long

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

By analyzing existing cross correlation between Invesco NASDAQ 100 and Harbor Long Term Growers, you can compare the effects of market volatilities on Invesco NASDAQ 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 Invesco NASDAQ with a short position of Harbor Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and Harbor Long.

Diversification Opportunities for Invesco NASDAQ and Harbor Long

0.99

Correlation Coefficient

Invesco NASDAQ  Harbor Long

No risk reduction

The 3 months correlation between Invesco and Harbor is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ 100 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 Invesco NASDAQ 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 Invesco NASDAQ 100 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 Invesco NASDAQ i.e., Invesco NASDAQ and Harbor Long go up and down completely randomly.

Pair Corralation between Invesco NASDAQ and Harbor Long

Given the investment horizon of 90 days Invesco NASDAQ is expected to generate 1.15 times less return on investment than Harbor Long. In addition to that, Invesco NASDAQ is 1.02 times more volatile than Harbor Long Term Growers. It trades about 0.11 of its total potential returns per unit of risk. Harbor Long Term Growers is currently generating about 0.13 per unit of volatility. If you would invest  2,561  in Harbor Long Term Growers on September 29, 2024 and sell it today you would earn a total of  218.00  from holding Harbor Long Term Growers or generate 8.51% return on investment over 90 days.

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

Invesco NASDAQ 100  vs.  Harbor Long Term Growers

Invesco NASDAQ 100

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco NASDAQ 100 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Invesco NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Harbor Long Term

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Long Term Growers are ranked lower than 10 (%) 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.

Pair Trading with Invesco NASDAQ and Harbor Long

The main advantage of trading using opposite Invesco NASDAQ and Harbor Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ 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 Invesco NASDAQ 100 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.