Correlation Between Western Asset and Harbor Diversified
Can any of the company-specific risk be diversified away by investing in both Western Asset and Harbor Diversified 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 Western Asset and Harbor Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Harbor Diversified International, you can compare the effects of market volatilities on Western Asset and Harbor Diversified 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 Western Asset with a short position of Harbor Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Harbor Diversified.
Diversification Opportunities for Western Asset and Harbor Diversified
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Harbor is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Harbor Diversified Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Diversified and Western Asset 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 Western Asset Diversified are associated (or correlated) with Harbor Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Diversified has no effect on the direction of Western Asset i.e., Western Asset and Harbor Diversified go up and down completely randomly.
Pair Corralation between Western Asset and Harbor Diversified
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Harbor Diversified. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 4.03 times less risky than Harbor Diversified. The mutual fund trades about -0.42 of its potential returns per unit of risk. The Harbor Diversified International is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,262 in Harbor Diversified International on January 12, 2025 and sell it today you would lose (49.00) from holding Harbor Diversified International or give up 3.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Harbor Diversified Internation
Performance |
| Timeline |
| Western Asset Diversified |
| Harbor Diversified |
Western Asset and Harbor Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Harbor Diversified
The main advantage of trading using opposite Western Asset and Harbor Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Harbor Diversified 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 Diversified will offset losses from the drop in Harbor Diversified's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Harbor Diversified vs. Angel Oak Multi Strategy | Harbor Diversified vs. Pnc Emerging Markets | Harbor Diversified vs. Ultraemerging Markets Profund | Harbor Diversified vs. Realestaterealreturn Strategy Fund |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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