Correlation Between Lgm Risk and Harbor International

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

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

Diversification Opportunities for Lgm Risk and Harbor International

-0.61

Correlation Coefficient

Lgm Risk  Harbor International

Excellent diversification

The 3 months correlation between Lgm and Harbor is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lgm Risk Managed and Harbor International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International and Lgm Risk 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 Lgm Risk Managed are associated (or correlated) with Harbor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor International has no effect on the direction of Lgm Risk i.e., Lgm Risk and Harbor International go up and down completely randomly.

Pair Corralation between Lgm Risk and Harbor International

Assuming the 90 days horizon Lgm Risk Managed is expected to generate 0.31 times more return on investment than Harbor International. However, Lgm Risk Managed is 3.26 times less risky than Harbor International. It trades about 0.18 of its potential returns per unit of risk. Harbor International Small is currently generating about -0.04 per unit of risk. If you would invest  1,119  in Lgm Risk Managed on September 13, 2024 and sell it today you would earn a total of  33.00  from holding Lgm Risk Managed or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Lgm Risk Managed  vs.  Harbor International Small

Lgm Risk Managed

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lgm Risk Managed are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lgm Risk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbor International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lgm Risk and Harbor International

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

The idea behind Lgm Risk Managed and Harbor International Small 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.