Correlation Between Harbor Diversified and Alger Small

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

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

Diversification Opportunities for Harbor Diversified and Alger Small

0.07

Correlation Coefficient

Harbor Diversified  Alger Small

Significant diversification

The 3 months correlation between Harbor and ALGER is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Diversified Internation and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap and Harbor Diversified 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 Diversified International are associated (or correlated) with Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of Harbor Diversified i.e., Harbor Diversified and Alger Small go up and down completely randomly.

Pair Corralation between Harbor Diversified and Alger Small

Assuming the 90 days horizon Harbor Diversified is expected to generate 1.08 times less return on investment than Alger Small. But when comparing it to its historical volatility, Harbor Diversified International is 1.77 times less risky than Alger Small. It trades about 0.05 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,520  in Alger Small Cap on December 2, 2024 and sell it today you would earn a total of  301.00  from holding Alger Small Cap or generate 19.8% return on investment over 90 days.

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

Harbor Diversified Internation  vs.  Alger Small Cap

Harbor Diversified

Risk-Adjusted Performance

Weak

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

Alger Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Small Cap 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 Harbor Diversified and Alger Small

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

The idea behind Harbor Diversified International and Alger Small Cap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.