Correlation Between Aggressive Growth and Harbor Capital
Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Harbor Capital 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 Aggressive Growth and Harbor Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Growth Fund and Harbor Capital Appreciation, you can compare the effects of market volatilities on Aggressive Growth and Harbor Capital 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 Aggressive Growth with a short position of Harbor Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Harbor Capital.
Diversification Opportunities for Aggressive Growth and Harbor Capital
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aggressive and Harbor is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Fund and Harbor Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Capital Appre and Aggressive Growth 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 Aggressive Growth Fund are associated (or correlated) with Harbor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Capital Appre has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Harbor Capital go up and down completely randomly.
Pair Corralation between Aggressive Growth and Harbor Capital
Assuming the 90 days horizon Aggressive Growth Fund is expected to generate 1.03 times more return on investment than Harbor Capital. However, Aggressive Growth is 1.03 times more volatile than Harbor Capital Appreciation. It trades about -0.25 of its potential returns per unit of risk. Harbor Capital Appreciation is currently generating about -0.27 per unit of risk. If you would invest 6,186 in Aggressive Growth Fund on January 20, 2024 and sell it today you would lose (305.00) from holding Aggressive Growth Fund or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Growth Fund vs. Harbor Capital Appreciation
Performance |
| Timeline |
| Aggressive Growth |
| Harbor Capital Appre |
Aggressive Growth and Harbor Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Growth and Harbor Capital
The main advantage of trading using opposite Aggressive Growth and Harbor Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Harbor Capital 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 Capital will offset losses from the drop in Harbor Capital's long position.| Aggressive Growth vs. Capital Growth Fund | Aggressive Growth vs. Emerging Markets Fund | Aggressive Growth vs. High Income Fund | Aggressive Growth vs. International Fund International |
| Harbor Capital vs. Harbor International Fund | Harbor Capital vs. Dodge Stock Fund | Harbor Capital vs. Total Return Fund | Harbor Capital vs. Europacific Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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