Correlation Between Harbor Capital and Harbor International

Can any of the company-specific risk be diversified away by investing in both Harbor Capital 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 Harbor Capital and Harbor International 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 Harbor International Small, you can compare the effects of market volatilities on Harbor Capital 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 Harbor Capital with a short position of Harbor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Capital and Harbor International.

Diversification Opportunities for Harbor Capital and Harbor International

-0.66

Correlation Coefficient

Harbor Capital  Harbor International

Excellent diversification

The 3 months correlation between Harbor and Harbor is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Capital Appreciation and Harbor International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International 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 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 Harbor Capital i.e., Harbor Capital and Harbor International go up and down completely randomly.

Pair Corralation between Harbor Capital and Harbor International

Assuming the 90 days horizon Harbor Capital Appreciation is expected to generate 1.25 times more return on investment than Harbor International. However, Harbor Capital is 1.25 times more volatile than Harbor International Small. It trades about 0.16 of its potential returns per unit of risk. Harbor International Small is currently generating about -0.14 per unit of risk. If you would invest  11,281  in Harbor Capital Appreciation on August 31, 2024 and sell it today you would earn a total of  1,165  from holding Harbor Capital Appreciation or generate 10.33% return on investment over 90 days.

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

Harbor Capital Appreciation  vs.  Harbor International Small

Harbor Capital Appre

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Capital Appreciation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Harbor Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Harbor International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbor International Small 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.

Pair Trading with Harbor Capital and Harbor International

The main advantage of trading using opposite Harbor Capital and Harbor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Capital 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 Harbor Capital Appreciation and Harbor International Small 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.