Correlation Between Harbor International and Large Cap
Can any of the company-specific risk be diversified away by investing in both Harbor International and Large Cap 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 Large Cap 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 Large Cap Fund, you can compare the effects of market volatilities on Harbor International and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor International and Large Cap.
Diversification Opportunities for Harbor International and Large Cap
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harbor and Large is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Harbor International Fund and Large Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Fund 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Fund has no effect on the direction of Harbor International i.e., Harbor International and Large Cap go up and down completely randomly.
Pair Corralation between Harbor International and Large Cap
Assuming the 90 days horizon Harbor International Fund is expected to generate 1.08 times more return on investment than Large Cap. However, Harbor International is 1.08 times more volatile than Large Cap Fund. It trades about 0.33 of its potential returns per unit of risk. Large Cap Fund is currently generating about 0.26 per unit of risk. If you would invest 4,389 in Harbor International Fund on November 4, 2024 and sell it today you would earn a total of 221.00 from holding Harbor International Fund or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Harbor International Fund vs. Large Cap Fund
Performance |
| Timeline |
| Harbor International |
| Large Cap Fund |
Harbor International and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor International and Large Cap
The main advantage of trading using opposite Harbor International and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor International position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Harbor International vs. Catalyst Exceed Defined | Harbor International vs. Massmutual Premier High | Harbor International vs. Chartwell Short Duration | Harbor International vs. Goldman Sachs High |
| Large Cap vs. Wasatch Large Cap | Large Cap vs. Loomis Sayles Bond | Large Cap vs. Harbor International Fund | Large Cap vs. Equity Series Class |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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