Correlation Between Absolute Convertible and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Harding Loevner Global, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Harding Loevner.
Diversification Opportunities for Absolute Convertible and Harding Loevner
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Absolute and Harding is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Harding Loevner Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Global and Absolute Convertible 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 Absolute Convertible Arbitrage 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 Global has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Harding Loevner go up and down completely randomly.
Pair Corralation between Absolute Convertible and Harding Loevner
Assuming the 90 days horizon Absolute Convertible is expected to generate 4.37 times less return on investment than Harding Loevner. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 11.32 times less risky than Harding Loevner. It trades about 0.66 of its potential returns per unit of risk. Harding Loevner Global is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,415 in Harding Loevner Global on November 4, 2024 and sell it today you would earn a total of 120.00 from holding Harding Loevner Global or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Harding Loevner Global
Performance |
| Timeline |
| Absolute Convertible |
| Harding Loevner Global |
Absolute Convertible and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Harding Loevner
The main advantage of trading using opposite Absolute Convertible and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Queens Road Small | Absolute Convertible vs. American Century Etf | Absolute Convertible vs. Vanguard Small Cap Value | Absolute Convertible vs. Amg River Road |
| Harding Loevner vs. Fidelity Large Cap | Harding Loevner vs. Touchstone Large Cap | Harding Loevner vs. Qs Large Cap | Harding Loevner vs. Tax Managed Large Cap |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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