Correlation Between Dow Jones and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Harding Loevner Funds, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Harding Loevner.
Diversification Opportunities for Dow Jones and Harding Loevner
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Harding is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Harding Loevner Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Funds and Dow Jones 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 Dow Jones Industrial 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 Funds has no effect on the direction of Dow Jones i.e., Dow Jones and Harding Loevner go up and down completely randomly.
Pair Corralation between Dow Jones and Harding Loevner
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.85 times more return on investment than Harding Loevner. However, Dow Jones Industrial is 1.18 times less risky than Harding Loevner. It trades about 0.11 of its potential returns per unit of risk. Harding Loevner Funds is currently generating about 0.03 per unit of risk. If you would invest 3,406,633 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,084,432 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Harding Loevner Funds
Performance |
| Timeline |
Dow Jones and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Harding Loevner Funds
Pair trading matchups for Harding Loevner
Pair Trading with Dow Jones and Harding Loevner
The main advantage of trading using opposite Dow Jones and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Harding Loevner vs. Harding Loevner Emerging | Harding Loevner vs. Harding Loevner Institutional | Harding Loevner vs. Harding Loevner Frontier | Harding Loevner vs. Harding Loevner Frontier |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |