Correlation Between Aqr Diversified and Harbor International

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

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

Diversification Opportunities for Aqr Diversified and Harbor International

0.82

Correlation Coefficient

Aqr Diversified  Harbor International

Very poor diversification

The 3 months correlation between Aqr and Harbor is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and Harbor International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International and Aqr Diversified 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 Aqr Diversified Arbitrage 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 Aqr Diversified i.e., Aqr Diversified and Harbor International go up and down completely randomly.

Pair Corralation between Aqr Diversified and Harbor International

Assuming the 90 days horizon Aqr Diversified is expected to generate 3.96 times less return on investment than Harbor International. But when comparing it to its historical volatility, Aqr Diversified Arbitrage is 7.95 times less risky than Harbor International. It trades about 0.43 of its potential returns per unit of risk. Harbor International Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,390  in Harbor International Fund on December 19, 2024 and sell it today you would earn a total of  485.00  from holding Harbor International Fund or generate 11.05% return on investment over 90 days.

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

Aqr Diversified Arbitrage  vs.  Harbor International Fund

Aqr Diversified Arbitrage

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Diversified Arbitrage are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aqr Diversified 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor International Fund are ranked lower than 16 (%) 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.

Pair Trading with Aqr Diversified and Harbor International

The main advantage of trading using opposite Aqr Diversified and Harbor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified 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 Aqr Diversified Arbitrage and Harbor International Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.