Correlation Between Harbor Capital and Embark Small

Can any of the company-specific risk be diversified away by investing in both Harbor Capital and Embark 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 Harbor Capital and Embark Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harbor Capital Appreciation and Embark Small Cap, you can compare the effects of market volatilities on Harbor Capital and Embark 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 Harbor Capital with a short position of Embark Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Capital and Embark Small.

Diversification Opportunities for Harbor Capital and Embark Small

0.87

Correlation Coefficient

Harbor Capital  Embark Small

Very poor diversification

The 3 months correlation between Harbor and Embark is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Capital Appreciation and Embark Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Small Cap and Harbor Capital 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 Capital Appreciation are associated (or correlated) with Embark Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Small Cap has no effect on the direction of Harbor Capital i.e., Harbor Capital and Embark Small go up and down completely randomly.

Pair Corralation between Harbor Capital and Embark Small

Assuming the 90 days horizon Harbor Capital Appreciation is expected to generate 0.99 times more return on investment than Embark Small. However, Harbor Capital Appreciation is 1.01 times less risky than Embark Small. It trades about 0.17 of its potential returns per unit of risk. Embark Small Cap is currently generating about 0.16 per unit of risk. If you would invest  10,789  in Harbor Capital Appreciation on September 3, 2024 and sell it today you would earn a total of  1,203  from holding Harbor Capital Appreciation or generate 11.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Harbor Capital Appreciation  vs.  Embark Small Cap

Harbor Capital Appre

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Capital Appreciation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Harbor Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Embark Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embark Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Embark Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Harbor Capital and Embark Small

The main advantage of trading using opposite Harbor Capital and Embark Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Capital position performs unexpectedly, Embark 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 Embark Small will offset losses from the drop in Embark Small's long position.

The idea behind Harbor Capital Appreciation and Embark Small Cap 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.