Correlation Between Mid-cap Value and Harbor Diversified

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

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

Diversification Opportunities for Mid-cap Value and Harbor Diversified

0.34

Correlation Coefficient

Mid-cap Value  Harbor Diversified

Weak diversification

The 3 months correlation between Mid-cap and Harbor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value Profund and Harbor Diversified Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Diversified and Mid-cap Value 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 Mid Cap Value Profund are associated (or correlated) with Harbor Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Diversified has no effect on the direction of Mid-cap Value i.e., Mid-cap Value and Harbor Diversified go up and down completely randomly.

Pair Corralation between Mid-cap Value and Harbor Diversified

Assuming the 90 days horizon Mid Cap Value Profund is expected to under-perform the Harbor Diversified. In addition to that, Mid-cap Value is 1.28 times more volatile than Harbor Diversified International. It trades about -0.12 of its total potential returns per unit of risk. Harbor Diversified International is currently generating about 0.03 per unit of volatility. If you would invest  1,246  in Harbor Diversified International on December 2, 2024 and sell it today you would earn a total of  15.00  from holding Harbor Diversified International or generate 1.2% return on investment over 90 days.

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

Mid Cap Value Profund  vs.  Harbor Diversified Internation

Mid Cap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap Value Profund 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.

Harbor Diversified

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Diversified International are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Harbor Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid-cap Value and Harbor Diversified

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

The idea behind Mid Cap Value Profund and Harbor Diversified International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.