Correlation Between Harbor Diversified and Municipal Bond

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Can any of the company-specific risk be diversified away by investing in both Harbor Diversified and Municipal Bond 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 Diversified and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Diversified International and Municipal Bond Fund, you can compare the effects of market volatilities on Harbor Diversified and Municipal Bond 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 Diversified with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Diversified and Municipal Bond.

Diversification Opportunities for Harbor Diversified and Municipal Bond

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Harbor and Municipal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Diversified Internation and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond and Harbor 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 Harbor Diversified International are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of Harbor Diversified i.e., Harbor Diversified and Municipal Bond go up and down completely randomly.

Pair Corralation between Harbor Diversified and Municipal Bond

Assuming the 90 days horizon Harbor Diversified International is expected to generate 3.17 times more return on investment than Municipal Bond. However, Harbor Diversified is 3.17 times more volatile than Municipal Bond Fund. It trades about 0.32 of its potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.16 per unit of risk. If you would invest  1,272  in Harbor Diversified International on September 13, 2024 and sell it today you would earn a total of  39.00  from holding Harbor Diversified International or generate 3.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Harbor Diversified Internation  vs.  Municipal Bond Fund

 Performance 
       Timeline  
Harbor Diversified 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Diversified International are ranked lower than 1 (%) 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.
Municipal Bond 

Risk-Adjusted Performance

0 of 100

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

Harbor Diversified and Municipal Bond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harbor Diversified and Municipal Bond

The main advantage of trading using opposite Harbor Diversified and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Diversified position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.
The idea behind Harbor Diversified International and Municipal Bond 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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