Correlation Between Harbor International and Royce Total

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

Diversification Opportunities for Harbor International and Royce Total

-0.49

Correlation Coefficient

Harbor International  Royce Total

Very good diversification

The 3 months correlation between Harbor and Royce is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Harbor International Fund and Royce Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Total Return 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 Royce Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Total Return has no effect on the direction of Harbor International i.e., Harbor International and Royce Total go up and down completely randomly.

Pair Corralation between Harbor International and Royce Total

Assuming the 90 days horizon Harbor International Fund is expected to generate 0.84 times more return on investment than Royce Total. However, Harbor International Fund is 1.19 times less risky than Royce Total. It trades about 0.18 of its potential returns per unit of risk. Royce Total Return is currently generating about -0.05 per unit of risk. If you would invest  4,394  in Harbor International Fund on December 28, 2024 and sell it today you would earn a total of  417.00  from holding Harbor International Fund or generate 9.49% 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.  Royce Total Return

Harbor International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor International Fund are ranked lower than 13 (%) 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.

Royce Total Return

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Royce Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harbor International and Royce Total

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

The idea behind Harbor International Fund and Royce Total Return 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.