Correlation Between Harbor International and Oakmark International

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

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

Diversification Opportunities for Harbor International and Oakmark International

0.9

Correlation Coefficient

Harbor International  Oakmark International

Almost no diversification

The 3 months correlation between Harbor and Oakmark is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Harbor International Fund and Oakmark International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Harbor International 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 International Fund are associated (or correlated) with Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of Harbor International i.e., Harbor International and Oakmark International go up and down completely randomly.

Pair Corralation between Harbor International and Oakmark International

Assuming the 90 days horizon Harbor International Fund is expected to under-perform the Oakmark International. In addition to that, Harbor International is 1.16 times more volatile than Oakmark International Fund. It trades about -0.21 of its total potential returns per unit of risk. Oakmark International Fund is currently generating about -0.08 per unit of volatility. If you would invest  2,539  in Oakmark International Fund on September 27, 2024 and sell it today you would lose (45.00) from holding Oakmark International Fund or give up 1.77% of portfolio value over 90 days.

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

Harbor International Fund  vs.  Oakmark International Fund

Harbor International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbor International Fund 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.

Oakmark International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakmark International Fund 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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Harbor International and Oakmark International

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

The idea behind Harbor International Fund and Oakmark 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.