Correlation Between IShares Russell and Harbor ETF
Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 IShares Russell and Harbor ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 2000 and Harbor ETF Trust, you can compare the effects of market volatilities on IShares Russell 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 IShares Russell with a short position of Harbor ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Harbor ETF.
Diversification Opportunities for IShares Russell and Harbor ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Harbor is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 2000 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 IShares Russell 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 iShares Russell 2000 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 IShares Russell i.e., IShares Russell and Harbor ETF go up and down completely randomly.
Pair Corralation between IShares Russell and Harbor ETF
Considering the 90-day investment horizon iShares Russell 2000 is expected to generate 0.96 times more return on investment than Harbor ETF. However, iShares Russell 2000 is 1.05 times less risky than Harbor ETF. It trades about 0.32 of its potential returns per unit of risk. Harbor ETF Trust is currently generating about 0.28 per unit of risk. If you would invest 21,776 in iShares Russell 2000 on September 1, 2024 and sell it today you would earn a total of 2,411 from holding iShares Russell 2000 or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares Russell 2000 vs. Harbor ETF Trust
Performance |
| Timeline |
| iShares Russell 2000 |
| Harbor ETF Trust |
IShares Russell and Harbor ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and Harbor ETF
The main advantage of trading using opposite IShares Russell and Harbor ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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.| IShares Russell vs. SPDR Dow Jones | IShares Russell vs. iShares MSCI Emerging | IShares Russell vs. Financial Select Sector | IShares Russell vs. SPDR SP 500 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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