Correlation Between Large Cap and Harbor Strategic

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

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

Diversification Opportunities for Large Cap and Harbor Strategic

0.75

Correlation Coefficient

Large Cap  Harbor Strategic

Poor diversification

The 3 months correlation between Large and Harbor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Fund 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 Large Cap 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 Large Cap Fund 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 Large Cap i.e., Large Cap and Harbor Strategic go up and down completely randomly.

Pair Corralation between Large Cap and Harbor Strategic

Assuming the 90 days horizon Large Cap Fund is expected to generate 0.98 times more return on investment than Harbor Strategic. However, Large Cap Fund is 1.02 times less risky than Harbor Strategic. It trades about 0.13 of its potential returns per unit of risk. Harbor Strategic Growth is currently generating about 0.08 per unit of risk. If you would invest  1,670  in Large Cap Fund on September 3, 2024 and sell it today you would earn a total of  101.00  from holding Large Cap Fund or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Large Cap Fund  vs.  Harbor Strategic Growth

Large Cap Fund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Large Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbor Strategic Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Strategic Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Harbor Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Large Cap and Harbor Strategic

The main advantage of trading using opposite Large Cap and Harbor Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap 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 Large Cap Fund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.