Correlation Between Harbor Health and Invesco DWA

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

Diversification Opportunities for Harbor Health and Invesco DWA

0.87

Correlation Coefficient

Harbor Health  Invesco DWA

Very poor diversification

The 3 months correlation between Harbor and Invesco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Health Care and Invesco DWA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Healthcare 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 Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Healthcare has no effect on the direction of Harbor Health i.e., Harbor Health and Invesco DWA go up and down completely randomly.

Pair Corralation between Harbor Health and Invesco DWA

If you would invest  3,994  in Invesco DWA Healthcare on January 29, 2024 and sell it today you would lose (6.00) from holding Invesco DWA Healthcare or give up 0.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.0%
Values	Daily Returns

Harbor Health Care  vs.  Invesco DWA Healthcare

Harbor Health Care

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Health Care are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Harbor Health is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Invesco DWA Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco DWA Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Invesco DWA is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Harbor Health and Invesco DWA

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

The idea behind Harbor Health Care and Invesco DWA Healthcare 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.