Correlation Between Capital World and Harbor Small
Can any of the company-specific risk be diversified away by investing in both Capital World and Harbor Small 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 Capital World and Harbor Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Harbor Small Cap, you can compare the effects of market volatilities on Capital World and Harbor Small 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 Capital World with a short position of Harbor Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Harbor Small.
Diversification Opportunities for Capital World and Harbor Small
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Harbor is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Harbor Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Small Cap and Capital World 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 Capital World Growth are associated (or correlated) with Harbor Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Small Cap has no effect on the direction of Capital World i.e., Capital World and Harbor Small go up and down completely randomly.
Pair Corralation between Capital World and Harbor Small
Assuming the 90 days horizon Capital World Growth is expected to generate 0.62 times more return on investment than Harbor Small. However, Capital World Growth is 1.62 times less risky than Harbor Small. It trades about 0.09 of its potential returns per unit of risk. Harbor Small Cap is currently generating about 0.05 per unit of risk. If you would invest 5,374 in Capital World Growth on September 1, 2024 and sell it today you would earn a total of 1,501 from holding Capital World Growth or generate 27.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Harbor Small Cap
Performance |
| Timeline |
| Capital World Growth |
| Harbor Small Cap |
Capital World and Harbor Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Harbor Small
The main advantage of trading using opposite Capital World and Harbor Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Harbor Small 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 Small will offset losses from the drop in Harbor Small's long position.| Capital World vs. Falcon Focus Scv | Capital World vs. Volumetric Fund Volumetric | Capital World vs. Iaadx | Capital World vs. Western Asset Municipal |
| Harbor Small vs. Crm Mid Cap | Harbor Small vs. Hotchkis Wiley Diversified | Harbor Small vs. Aberdeen Select International | Harbor Small vs. Tcw Relative Value |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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