Correlation Between Commonwealth Global and Harbor International

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

By analyzing existing cross correlation between Commonwealth Global Fund and Harbor International Fund, you can compare the effects of market volatilities on Commonwealth Global and Harbor International 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 Commonwealth Global with a short position of Harbor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Harbor International.

Diversification Opportunities for Commonwealth Global and Harbor International

0.61

Correlation Coefficient

Commonwealth Global  Harbor International

Poor diversification

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

Pair Corralation between Commonwealth Global and Harbor International

Assuming the 90 days horizon Commonwealth Global Fund is expected to under-perform the Harbor International. In addition to that, Commonwealth Global is 1.08 times more volatile than Harbor International Fund. It trades about -0.13 of its total potential returns per unit of risk. Harbor International Fund is currently generating about 0.08 per unit of volatility. If you would invest  4,592  in Harbor International Fund on December 2, 2024 and sell it today you would earn a total of  148.00  from holding Harbor International Fund or generate 3.22% return on investment over 90 days.

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

Commonwealth Global Fund  vs.  Harbor International Fund

Commonwealth Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commonwealth Global Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Harbor International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor International Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Harbor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Commonwealth Global and Harbor International

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

The idea behind Commonwealth Global Fund and Harbor International Fund 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.