Correlation Between American Beacon and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both American Beacon and Harding Loevner 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 American Beacon and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon International and Harding Loevner International, you can compare the effects of market volatilities on American Beacon and Harding Loevner 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 American Beacon with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Harding Loevner.
Diversification Opportunities for American Beacon and Harding Loevner
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Harding is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon International and Harding Loevner International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Inte and American Beacon 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 American Beacon International are associated (or correlated) with Harding Loevner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harding Loevner Inte has no effect on the direction of American Beacon i.e., American Beacon and Harding Loevner go up and down completely randomly.
Pair Corralation between American Beacon and Harding Loevner
Assuming the 90 days horizon American Beacon International is expected to under-perform the Harding Loevner. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Beacon International is 1.08 times less risky than Harding Loevner. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Harding Loevner International is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 2,767 in Harding Loevner International on August 25, 2024 and sell it today you would lose (101.00) from holding Harding Loevner International or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Beacon International vs. Harding Loevner International
Performance |
| Timeline |
| American Beacon Inte |
| Harding Loevner Inte |
American Beacon and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Harding Loevner
The main advantage of trading using opposite American Beacon and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon position performs unexpectedly, Harding Loevner 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 Harding Loevner will offset losses from the drop in Harding Loevner's long position.| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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