Correlation Between Embark Commodity and Harbor Small

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

By analyzing existing cross correlation between Embark Commodity Strategy and Harbor Small Cap, you can compare the effects of market volatilities on Embark Commodity and Harbor Small 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 Embark Commodity with a short position of Harbor Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Commodity and Harbor Small.

Diversification Opportunities for Embark Commodity and Harbor Small

-0.27

Correlation Coefficient

Embark Commodity  Harbor Small

Very good diversification

The 3 months correlation between Embark and Harbor is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Embark Commodity Strategy and Harbor Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Small Cap and Embark Commodity 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 Embark Commodity Strategy are associated (or correlated) with Harbor Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Small Cap has no effect on the direction of Embark Commodity i.e., Embark Commodity and Harbor Small go up and down completely randomly.

Pair Corralation between Embark Commodity and Harbor Small

Assuming the 90 days horizon Embark Commodity Strategy is expected to generate 0.43 times more return on investment than Harbor Small. However, Embark Commodity Strategy is 2.32 times less risky than Harbor Small. It trades about 0.19 of its potential returns per unit of risk. Harbor Small Cap is currently generating about -0.09 per unit of risk. If you would invest  1,010  in Embark Commodity Strategy on December 28, 2024 and sell it today you would earn a total of  79.00  from holding Embark Commodity Strategy or generate 7.82% return on investment over 90 days.

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

Embark Commodity Strategy  vs.  Harbor Small Cap

Embark Commodity Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embark Commodity Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Embark Commodity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Harbor Small Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Embark Commodity and Harbor Small

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

The idea behind Embark Commodity Strategy and Harbor Small Cap 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.