Correlation Between Vanguard Total and Harbor Capital

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

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

Diversification Opportunities for Vanguard Total and Harbor Capital

-0.61

Correlation Coefficient

Vanguard Total  Harbor Capital

Excellent diversification

The 3 months correlation between Vanguard and Harbor is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Harbor Capital Advisors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Capital Advisors and Vanguard Total 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 Total Bond are associated (or correlated) with Harbor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Capital Advisors has no effect on the direction of Vanguard Total i.e., Vanguard Total and Harbor Capital go up and down completely randomly.

Pair Corralation between Vanguard Total and Harbor Capital

Considering the 90-day investment horizon Vanguard Total is expected to generate 8.42 times less return on investment than Harbor Capital. But when comparing it to its historical volatility, Vanguard Total Bond is 3.06 times less risky than Harbor Capital. It trades about 0.02 of its potential returns per unit of risk. Harbor Capital Advisors is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,247  in Harbor Capital Advisors on October 27, 2024 and sell it today you would earn a total of  525.00  from holding Harbor Capital Advisors or generate 42.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.75%
Values	Daily Returns

Vanguard Total Bond  vs.  Harbor Capital Advisors

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Harbor Capital Advisors

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Harbor Capital Advisors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady basic indicators, Harbor Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Total and Harbor Capital

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

The idea behind Vanguard Total Bond and Harbor Capital Advisors 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.