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 Emerging, 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
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Harding is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Harding Loevner Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Emerging 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 Emerging 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 is expected to generate 3.78 times less return on investment than Harding Loevner. But when comparing it to its historical volatility, American Funds New is 1.24 times less risky than Harding Loevner. It trades about 0.02 of its potential returns per unit of risk. Harding Loevner Emerging is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,999 in Harding Loevner Emerging on September 1, 2024 and sell it today you would earn a total of 256.00 from holding Harding Loevner Emerging or generate 6.4% return on investment 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 Emerging
Performance |
| Timeline |
| American Funds New |
| Harding Loevner Emerging |
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. Morgan Stanley Global | American Funds vs. Artisan Global Unconstrained | American Funds vs. Kinetics Global Fund | American Funds vs. Barings Global Floating |
| Harding Loevner vs. Ssga International Stock | Harding Loevner vs. Schwab E Equity | Harding Loevner vs. Driehaus Emerging Markets | Harding Loevner vs. Columbia Emerging Markets |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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