Correlation Between GM and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Harding Loevner Funds, you can compare the effects of market volatilities on GM 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 GM with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Harding Loevner.
Diversification Opportunities for GM and Harding Loevner
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Harding is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Harding Loevner Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Funds and GM 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 General Motors 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 Funds has no effect on the direction of GM i.e., GM and Harding Loevner go up and down completely randomly.
Pair Corralation between GM and Harding Loevner
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Harding Loevner. In addition to that, GM is 3.51 times more volatile than Harding Loevner Funds. It trades about -0.32 of its total potential returns per unit of risk. Harding Loevner Funds is currently generating about 0.1 per unit of volatility. If you would invest 1,152 in Harding Loevner Funds on November 28, 2024 and sell it today you would earn a total of 15.00 from holding Harding Loevner Funds or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Harding Loevner Funds
Performance |
| Timeline |
| General Motors |
| Harding Loevner Funds |
GM and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Harding Loevner
The main advantage of trading using opposite GM and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and Harding Loevner Funds 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. Ab Bond Inflation | Harding Loevner vs. Schwab Treasury Inflation | Harding Loevner vs. Credit Suisse Multialternative | Harding Loevner vs. Tiaa Cref Inflation Linked Bond |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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