Correlation Between Harbor ETF and Harbor Dividend

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

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

Diversification Opportunities for Harbor ETF and Harbor Dividend

0.68

Correlation Coefficient

Harbor ETF  Harbor Dividend

Poor diversification

The 3 months correlation between Harbor and Harbor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Harbor ETF Trust and Harbor Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Dividend Growth and Harbor ETF 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 ETF Trust are associated (or correlated) with Harbor Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Dividend Growth has no effect on the direction of Harbor ETF i.e., Harbor ETF and Harbor Dividend go up and down completely randomly.

Pair Corralation between Harbor ETF and Harbor Dividend

Given the investment horizon of 90 days Harbor ETF is expected to generate 4.54 times less return on investment than Harbor Dividend. But when comparing it to its historical volatility, Harbor ETF Trust is 3.12 times less risky than Harbor Dividend. It trades about 0.17 of its potential returns per unit of risk. Harbor Dividend Growth is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,507  in Harbor Dividend Growth on September 4, 2024 and sell it today you would earn a total of  67.00  from holding Harbor Dividend Growth or generate 4.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Harbor ETF Trust  vs.  Harbor Dividend Growth

Harbor ETF Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Harbor ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Harbor Dividend Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Dividend Growth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Harbor Dividend may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harbor ETF and Harbor Dividend

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

The idea behind Harbor ETF Trust and Harbor Dividend 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.