Correlation Between Harbor International and Oakmark International

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

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

Diversification Opportunities for Harbor International and Oakmark International

0.83

Correlation Coefficient

Harbor International  Oakmark International

Very poor diversification

The 3 months correlation between Harbor and Oakmark is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Harbor International Small and Oakmark International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Harbor International 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 International Small are associated (or correlated) with Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of Harbor International i.e., Harbor International and Oakmark International go up and down completely randomly.

Pair Corralation between Harbor International and Oakmark International

Assuming the 90 days horizon Harbor International Small is expected to generate 1.05 times more return on investment than Oakmark International. However, Harbor International is 1.05 times more volatile than Oakmark International Small. It trades about -0.05 of its potential returns per unit of risk. Oakmark International Small is currently generating about -0.15 per unit of risk. If you would invest  1,489  in Harbor International Small on January 26, 2024 and sell it today you would lose (13.00) from holding Harbor International Small or give up 0.87% of portfolio value over 90 days.

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

Harbor International Small  vs.  Oakmark International Small

Harbor International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor International Small are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Harbor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakmark International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakmark International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Oakmark International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harbor International and Oakmark International

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

The idea behind Harbor International Small and Oakmark International Small 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.