Correlation Between Harding Loevner and Schwab Core
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Schwab Core 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 Harding Loevner and Schwab Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harding Loevner Emerging and Schwab E Equity, you can compare the effects of market volatilities on Harding Loevner and Schwab Core 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 Harding Loevner with a short position of Schwab Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Schwab Core.
Diversification Opportunities for Harding Loevner and Schwab Core
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harding and Schwab is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Emerging and Schwab E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab E Equity and Harding Loevner 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 Harding Loevner Emerging are associated (or correlated) with Schwab Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab E Equity has no effect on the direction of Harding Loevner i.e., Harding Loevner and Schwab Core go up and down completely randomly.
Pair Corralation between Harding Loevner and Schwab Core
Assuming the 90 days horizon Harding Loevner Emerging is expected to under-perform the Schwab Core. In addition to that, Harding Loevner is 1.19 times more volatile than Schwab E Equity. It trades about -0.12 of its total potential returns per unit of risk. Schwab E Equity is currently generating about 0.28 per unit of volatility. If you would invest 2,441 in Schwab E Equity on September 1, 2024 and sell it today you would earn a total of 103.00 from holding Schwab E Equity or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Harding Loevner Emerging vs. Schwab E Equity
Performance |
| Timeline |
| Harding Loevner Emerging |
| Schwab E Equity |
Harding Loevner and Schwab Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Schwab Core
The main advantage of trading using opposite Harding Loevner and Schwab Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Schwab Core 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 Schwab Core will offset losses from the drop in Schwab Core's long position.| Harding Loevner vs. Ssga International Stock | Harding Loevner vs. Schwab E Equity | Harding Loevner vs. Driehaus Emerging Markets | Harding Loevner vs. Columbia Emerging Markets |
| Schwab Core vs. Schwab Dividend Equity | Schwab Core vs. Schwab Large Cap Growth | Schwab Core vs. Ssga International Stock | Schwab Core vs. Schwab Small Cap Equity |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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