Correlation Between Harbor Capital and Free Market

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

By analyzing existing cross correlation between Harbor Capital Appreciation and Free Market Equity, you can compare the effects of market volatilities on Harbor Capital and Free Market 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 Harbor Capital with a short position of Free Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Capital and Free Market.

Diversification Opportunities for Harbor Capital and Free Market

0.81

Correlation Coefficient

Harbor Capital  Free Market

Very poor diversification

The 3 months correlation between Harbor and Free is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Capital Appreciation and Free Market Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Free Market Equity and Harbor Capital 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 Harbor Capital Appreciation are associated (or correlated) with Free Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Free Market Equity has no effect on the direction of Harbor Capital i.e., Harbor Capital and Free Market go up and down completely randomly.

Pair Corralation between Harbor Capital and Free Market

Assuming the 90 days horizon Harbor Capital Appreciation is expected to generate 1.33 times more return on investment than Free Market. However, Harbor Capital is 1.33 times more volatile than Free Market Equity. It trades about 0.03 of its potential returns per unit of risk. Free Market Equity is currently generating about 0.04 per unit of risk. If you would invest  10,979  in Harbor Capital Appreciation on October 25, 2024 and sell it today you would earn a total of  875.00  from holding Harbor Capital Appreciation or generate 7.97% return on investment over 90 days.

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

Harbor Capital Appreciation  vs.  Free Market Equity

Harbor Capital Appre

Risk-Adjusted Performance

0 of 100

Very Weak

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

Free Market Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Free Market Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Free Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harbor Capital and Free Market

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

The idea behind Harbor Capital Appreciation and Free Market Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.