Correlation Between Harbor International and Large Cap

Can any of the company-specific risk be diversified away by investing in both Harbor International and Large Cap 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 Large Cap 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 Large Cap Growth Profund, you can compare the effects of market volatilities on Harbor International and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor International and Large Cap.

Diversification Opportunities for Harbor International and Large Cap

-0.48

Correlation Coefficient

Harbor International  Large Cap

Very good diversification

The 3 months correlation between Harbor and Large is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Harbor International Fund and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Harbor International i.e., Harbor International and Large Cap go up and down completely randomly.

Pair Corralation between Harbor International and Large Cap

Assuming the 90 days horizon Harbor International Fund is expected to generate 0.6 times more return on investment than Large Cap. However, Harbor International Fund is 1.67 times less risky than Large Cap. It trades about 0.2 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about -0.11 per unit of risk. If you would invest  4,403  in Harbor International Fund on December 21, 2024 and sell it today you would earn a total of  461.00  from holding Harbor International Fund or generate 10.47% return on investment over 90 days.

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

Harbor International Fund  vs.  Large Cap Growth Profund

Harbor International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor International Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Harbor International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Large Cap Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Large Cap Growth Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's forward 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 International and Large Cap

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

The idea behind Harbor International Fund and Large Cap Growth Profund 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.