Correlation Between Embark Small and Harbor Small

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

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

Diversification Opportunities for Embark Small and Harbor Small

0.99

Correlation Coefficient

Embark Small  Harbor Small

No risk reduction

The 3 months correlation between Embark and Harbor is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Embark Small Cap 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 Embark Small 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 Embark Small Cap 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 Embark Small i.e., Embark Small and Harbor Small go up and down completely randomly.

Pair Corralation between Embark Small and Harbor Small

Assuming the 90 days horizon Embark Small Cap is expected to generate 1.01 times more return on investment than Harbor Small. However, Embark Small is 1.01 times more volatile than Harbor Small Cap. It trades about 0.14 of its potential returns per unit of risk. Harbor Small Cap is currently generating about 0.13 per unit of risk. If you would invest  971.00  in Embark Small Cap on May 4, 2025 and sell it today you would earn a total of  99.00  from holding Embark Small Cap or generate 10.2% return on investment over 90 days.

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

Embark Small Cap  vs.  Harbor Small Cap

Embark Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embark Small 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, Embark Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Harbor Small Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Harbor Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Embark Small and Harbor Small

The main advantage of trading using opposite Embark Small and Harbor Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Small 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.

The idea behind Embark Small Cap and Harbor 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.