Correlation Between Lsv Value and Harbor Mid

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

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

Diversification Opportunities for Lsv Value and Harbor Mid

0.99

Correlation Coefficient

Lsv Value  Harbor Mid

No risk reduction

The 3 months correlation between Lsv and Harbor is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Value Equity and Harbor Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Mid Cap and Lsv Value 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 Lsv Value Equity are associated (or correlated) with Harbor Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Mid Cap has no effect on the direction of Lsv Value i.e., Lsv Value and Harbor Mid go up and down completely randomly.

Pair Corralation between Lsv Value and Harbor Mid

Assuming the 90 days horizon Lsv Value is expected to generate 2.25 times less return on investment than Harbor Mid. In addition to that, Lsv Value is 1.04 times more volatile than Harbor Mid Cap. It trades about 0.03 of its total potential returns per unit of risk. Harbor Mid Cap is currently generating about 0.07 per unit of volatility. If you would invest  2,137  in Harbor Mid Cap on September 4, 2024 and sell it today you would earn a total of  788.00  from holding Harbor Mid Cap or generate 36.87% return on investment over 90 days.

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

Lsv Value Equity  vs.  Harbor Mid Cap

Lsv Value Equity

Risk-Adjusted Performance

12 of 100

Good

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

Harbor Mid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Mid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Harbor Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lsv Value and Harbor Mid

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

The idea behind Lsv Value Equity and Harbor Mid 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.