Correlation Between Intermediate Government and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Intermediate Government 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 Intermediate Government and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and Harding Loevner Global, you can compare the effects of market volatilities on Intermediate Government 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 Intermediate Government with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Harding Loevner.
Diversification Opportunities for Intermediate Government and Harding Loevner
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Intermediate and Harding is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond 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 Intermediate Government 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 Intermediate Government Bond 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 Intermediate Government i.e., Intermediate Government and Harding Loevner go up and down completely randomly.
Pair Corralation between Intermediate Government and Harding Loevner
Assuming the 90 days horizon Intermediate Government is expected to generate 27.14 times less return on investment than Harding Loevner. But when comparing it to its historical volatility, Intermediate Government Bond is 9.44 times less risky than Harding Loevner. It trades about 0.08 of its potential returns per unit of risk. Harding Loevner Global is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,436 in Harding Loevner Global on November 7, 2024 and sell it today you would earn a total of 99.00 from holding Harding Loevner Global or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Government Bond vs. Harding Loevner Global
Performance |
| Timeline |
| Intermediate Government |
| Harding Loevner Global |
Intermediate Government and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Government and Harding Loevner
The main advantage of trading using opposite Intermediate Government and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government 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.The idea behind Intermediate Government Bond and Harding Loevner Global 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.
| Harding Loevner vs. Harding Loevner Global | Harding Loevner vs. Harding Loevner International | Harding Loevner vs. Invesco Disciplined Equity | Harding Loevner vs. Global Stock Fund |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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