Correlation Between American Funds and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Harding Loevner Institutional, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Harding Loevner.
Diversification Opportunities for American Funds and Harding Loevner
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Harding is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Harding Loevner Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Inst and American Funds 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 American Funds New 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 Inst has no effect on the direction of American Funds i.e., American Funds and Harding Loevner go up and down completely randomly.
Pair Corralation between American Funds and Harding Loevner
Assuming the 90 days horizon American Funds New is expected to generate 0.81 times more return on investment than Harding Loevner. However, American Funds New is 1.24 times less risky than Harding Loevner. It trades about -0.22 of its potential returns per unit of risk. Harding Loevner Institutional is currently generating about -0.2 per unit of risk. If you would invest 8,333 in American Funds New on August 26, 2024 and sell it today you would lose (257.00) from holding American Funds New or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Harding Loevner Institutional
Performance |
| Timeline |
| American Funds New |
| Harding Loevner Inst |
American Funds and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Harding Loevner
The main advantage of trading using opposite American Funds and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| Harding Loevner vs. Ssga International Stock | Harding Loevner vs. Schwab E Equity | Harding Loevner vs. Columbia Emerging Markets | Harding Loevner vs. Aquagold International |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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