Correlation Between Ford and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Harding Loevner International, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Harding Loevner.
Diversification Opportunities for Ford and Harding Loevner
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Harding is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Harding Loevner go up and down completely randomly.
Pair Corralation between Ford and Harding Loevner
Taking into account the 90-day investment horizon Ford is expected to generate 1.81 times less return on investment than Harding Loevner. In addition to that, Ford is 2.77 times more volatile than Harding Loevner International. It trades about 0.01 of its total potential returns per unit of risk. Harding Loevner International is currently generating about 0.04 per unit of volatility. If you would invest 1,165 in Harding Loevner International on September 3, 2024 and sell it today you would earn a total of 182.00 from holding Harding Loevner International or generate 15.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Harding Loevner International
Performance |
| Timeline |
| Ford Motor |
| Harding Loevner Inte |
Ford and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Harding Loevner
The main advantage of trading using opposite Ford and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Harding Loevner vs. Kinetics Small Cap | Harding Loevner vs. Small Midcap Dividend Income | Harding Loevner vs. The Hartford Small | Harding Loevner vs. Champlain Small |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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