Correlation Between Harbor Health and Vanguard Total

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

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

Diversification Opportunities for Harbor Health and Vanguard Total

-0.01

Correlation Coefficient

Harbor Health  Vanguard Total

Good diversification

The 3 months correlation between Harbor and Vanguard is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Health Care and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Harbor Health 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 Health Care are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Harbor Health i.e., Harbor Health and Vanguard Total go up and down completely randomly.

Pair Corralation between Harbor Health and Vanguard Total

Given the investment horizon of 90 days Harbor Health Care is expected to under-perform the Vanguard Total. In addition to that, Harbor Health is 1.3 times more volatile than Vanguard Total Stock. It trades about -0.12 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.1 per unit of volatility. If you would invest  25,112  in Vanguard Total Stock on February 23, 2024 and sell it today you would earn a total of  1,110  from holding Vanguard Total Stock or generate 4.42% return on investment over 90 days.

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

Harbor Health Care  vs.  Vanguard Total Stock

Harbor Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbor Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Vanguard Total Stock

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Harbor Health and Vanguard Total

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

The idea behind Harbor Health Care and Vanguard Total Stock 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.