Correlation Between Harbor International and New Economy
Can any of the company-specific risk be diversified away by investing in both Harbor International and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Harbor International and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor International and New Economy.
Diversification Opportunities for Harbor International and New Economy
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harbor and New is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Harbor International Fund and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Harbor International i.e., Harbor International and New Economy go up and down completely randomly.
Pair Corralation between Harbor International and New Economy
Assuming the 90 days horizon Harbor International Fund is expected to generate 0.76 times more return on investment than New Economy. However, Harbor International Fund is 1.31 times less risky than New Economy. It trades about 0.27 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.11 per unit of risk. If you would invest 4,420 in Harbor International Fund on November 5, 2024 and sell it today you would earn a total of 190.00 from holding Harbor International Fund or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harbor International Fund vs. New Economy Fund
Performance |
| Timeline |
| Harbor International |
| New Economy Fund |
Harbor International and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor International and New Economy
The main advantage of trading using opposite Harbor International and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor International position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy'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 |
| New Economy vs. Abbey Capital Futures | New Economy vs. Ab Bond Inflation | New Economy vs. Cref Inflation Linked Bond | New Economy vs. Asg Managed Futures |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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