Correlation Between International Investors and Harbor International
Can any of the company-specific risk be diversified away by investing in both International Investors 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 International Investors and Harbor International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Harbor International Fund, you can compare the effects of market volatilities on International Investors 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 International Investors with a short position of Harbor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Harbor International.
Diversification Opportunities for International Investors and Harbor International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between International and Harbor is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Harbor International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International and International Investors 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 International Investors Gold 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 International Investors i.e., International Investors and Harbor International go up and down completely randomly.
Pair Corralation between International Investors and Harbor International
Assuming the 90 days horizon International Investors Gold is expected to generate 2.55 times more return on investment than Harbor International. However, International Investors is 2.55 times more volatile than Harbor International Fund. It trades about 0.01 of its potential returns per unit of risk. Harbor International Fund is currently generating about -0.08 per unit of risk. If you would invest 1,253 in International Investors Gold on September 13, 2024 and sell it today you would earn a total of 0.00 from holding International Investors Gold or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Investors Gold vs. Harbor International Fund
Performance |
| Timeline |
| International Investors |
| Harbor International |
International Investors and Harbor International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Investors and Harbor International
The main advantage of trading using opposite International Investors and Harbor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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 International Investors Gold 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.
| Harbor International vs. James Balanced Golden | Harbor International vs. Short Precious Metals | Harbor International vs. Global Gold Fund | Harbor International vs. International Investors Gold |
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.
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