Correlation Between Harbor Long and First Trust

Can any of the company-specific risk be diversified away by investing in both Harbor Long and First Trust 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 First Trust 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 First Trust Latin, you can compare the effects of market volatilities on Harbor Long and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Long and First Trust.

Diversification Opportunities for Harbor Long and First Trust

-0.77

Correlation Coefficient

Harbor Long  First Trust

Pay attention - limited upside

The 3 months correlation between Harbor and First is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Long Term Growers and First Trust Latin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Latin 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Latin has no effect on the direction of Harbor Long i.e., Harbor Long and First Trust go up and down completely randomly.

Pair Corralation between Harbor Long and First Trust

Given the investment horizon of 90 days Harbor Long Term Growers is expected to generate 0.87 times more return on investment than First Trust. However, Harbor Long Term Growers is 1.15 times less risky than First Trust. It trades about 0.17 of its potential returns per unit of risk. First Trust Latin is currently generating about -0.09 per unit of risk. If you would invest  2,507  in Harbor Long Term Growers on September 12, 2024 and sell it today you would earn a total of  262.00  from holding Harbor Long Term Growers or generate 10.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Harbor Long Term Growers  vs.  First Trust Latin

Harbor Long Term

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Long Term Growers are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Harbor Long may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Trust Latin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Latin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, First Trust is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Harbor Long and First Trust

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

The idea behind Harbor Long Term Growers and First Trust Latin 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.