Correlation Between Balanced Fund and Harbor International

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

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

Diversification Opportunities for Balanced Fund and Harbor International

-0.28

Correlation Coefficient

Balanced Fund  Harbor International

Very good diversification

The 3 months correlation between Balanced and Harbor is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Harbor International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International and Balanced Fund 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 Balanced Fund Retail 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 Balanced Fund i.e., Balanced Fund and Harbor International go up and down completely randomly.

Pair Corralation between Balanced Fund and Harbor International

Assuming the 90 days horizon Balanced Fund Retail is expected to under-perform the Harbor International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Balanced Fund Retail is 1.26 times less risky than Harbor International. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Harbor International Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,482  in Harbor International Fund on December 30, 2024 and sell it today you would earn a total of  367.00  from holding Harbor International Fund or generate 8.19% return on investment over 90 days.

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

Balanced Fund Retail  vs.  Harbor International Fund

Balanced Fund Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Balanced Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbor International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor International Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Harbor International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Balanced Fund and Harbor International

The main advantage of trading using opposite Balanced Fund and Harbor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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 Balanced Fund Retail 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.