Correlation Between Fidelity Contrafund and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund 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 Fidelity Contrafund and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund K6 and Harding Loevner International, you can compare the effects of market volatilities on Fidelity Contrafund 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 Fidelity Contrafund with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Harding Loevner.
Diversification Opportunities for Fidelity Contrafund and Harding Loevner
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Harding is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund K6 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 Fidelity Contrafund 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 Fidelity Contrafund K6 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 Fidelity Contrafund i.e., Fidelity Contrafund and Harding Loevner go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Harding Loevner
Assuming the 90 days horizon Fidelity Contrafund K6 is expected to generate 1.25 times more return on investment than Harding Loevner. However, Fidelity Contrafund is 1.25 times more volatile than Harding Loevner International. It trades about 0.1 of its potential returns per unit of risk. Harding Loevner International is currently generating about 0.01 per unit of risk. If you would invest 2,788 in Fidelity Contrafund K6 on September 1, 2024 and sell it today you would earn a total of 369.00 from holding Fidelity Contrafund K6 or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund K6 vs. Harding Loevner International
Performance |
| Timeline |
| Fidelity Contrafund |
| Harding Loevner Inte |
Fidelity Contrafund and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Harding Loevner
The main advantage of trading using opposite Fidelity Contrafund and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund 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 Fidelity Contrafund K6 and Harding Loevner International 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 Funds | Harding Loevner vs. Harding Loevner Emerging | Harding Loevner vs. Harding Loevner Institutional | 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |