Correlation Between Embark Small and Harbor Strategic

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

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

Diversification Opportunities for Embark Small and Harbor Strategic

0.79

Correlation Coefficient

Embark Small  Harbor Strategic

Poor diversification

The 3 months correlation between Embark and Harbor is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Embark Small Cap and Harbor Strategic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Strategic Growth and Embark Small 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 Small Cap are associated (or correlated) with Harbor Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Strategic Growth has no effect on the direction of Embark Small i.e., Embark Small and Harbor Strategic go up and down completely randomly.

Pair Corralation between Embark Small and Harbor Strategic

Assuming the 90 days horizon Embark Small Cap is expected to generate 0.26 times more return on investment than Harbor Strategic. However, Embark Small Cap is 3.81 times less risky than Harbor Strategic. It trades about -0.17 of its potential returns per unit of risk. Harbor Strategic Growth is currently generating about -0.13 per unit of risk. If you would invest  1,179  in Embark Small Cap on December 1, 2024 and sell it today you would lose (121.00) from holding Embark Small Cap or give up 10.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Embark Small Cap  vs.  Harbor Strategic Growth

Embark Small Cap

Risk-Adjusted Performance

Very Weak

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

Harbor Strategic Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harbor Strategic Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Embark Small and Harbor Strategic

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

The idea behind Embark Small Cap and Harbor Strategic Growth 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 Stocks Directory module to find actively traded stocks across global markets.