Correlation Between Vanguard Real and Harbor ETF

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

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

Diversification Opportunities for Vanguard Real and Harbor ETF

0.75

Correlation Coefficient

Vanguard Real  Harbor ETF

Poor diversification

The 3 months correlation between Vanguard and Harbor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Real Estate and Harbor ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor ETF Trust and Vanguard Real 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 Vanguard Real Estate are associated (or correlated) with Harbor ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor ETF Trust has no effect on the direction of Vanguard Real i.e., Vanguard Real and Harbor ETF go up and down completely randomly.

Pair Corralation between Vanguard Real and Harbor ETF

Considering the 90-day investment horizon Vanguard Real Estate is expected to generate 1.06 times more return on investment than Harbor ETF. However, Vanguard Real is 1.06 times more volatile than Harbor ETF Trust. It trades about 0.08 of its potential returns per unit of risk. Harbor ETF Trust is currently generating about 0.06 per unit of risk. If you would invest  9,429  in Vanguard Real Estate on September 2, 2024 and sell it today you would earn a total of  387.00  from holding Vanguard Real Estate or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Vanguard Real Estate  vs.  Harbor ETF Trust

Vanguard Real Estate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Vanguard Real is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Harbor ETF Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor ETF Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Harbor ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Real and Harbor ETF

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

The idea behind Vanguard Real Estate and Harbor ETF Trust 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.