Correlation Between Harbor All and Harbor Capital

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

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

Diversification Opportunities for Harbor All and Harbor Capital

0.58

Correlation Coefficient

Harbor All  Harbor Capital

Very weak diversification

The 3 months correlation between Harbor and Harbor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Harbor All Weather Inflation and Harbor Capital Advisors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Capital Advisors and Harbor All 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 All Weather Inflation are associated (or correlated) with Harbor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Capital Advisors has no effect on the direction of Harbor All i.e., Harbor All and Harbor Capital go up and down completely randomly.

Pair Corralation between Harbor All and Harbor Capital

Given the investment horizon of 90 days Harbor All is expected to generate 1.25 times less return on investment than Harbor Capital. But when comparing it to its historical volatility, Harbor All Weather Inflation is 1.39 times less risky than Harbor Capital. It trades about 0.12 of its potential returns per unit of risk. Harbor Capital Advisors is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,268  in Harbor Capital Advisors on October 27, 2024 and sell it today you would earn a total of  55.00  from holding Harbor Capital Advisors or generate 4.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.0%
Values	Daily Returns

Harbor All Weather Inflation  vs.  Harbor Capital Advisors

Harbor All Weather

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor All Weather Inflation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Harbor All is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Harbor Capital Advisors

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Harbor Capital Advisors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent basic indicators, Harbor Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Harbor All and Harbor Capital

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

The idea behind Harbor All Weather Inflation and Harbor Capital Advisors 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.