Correlation Between Harding Loevner and Schwab Large-cap
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Schwab Large-cap 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 Large-cap 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 Large Cap Growth, you can compare the effects of market volatilities on Harding Loevner and Schwab Large-cap 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 Large-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Schwab Large-cap.
Diversification Opportunities for Harding Loevner and Schwab Large-cap
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harding and Schwab is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Emerging and Schwab Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Large Cap 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 Large-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Large Cap has no effect on the direction of Harding Loevner i.e., Harding Loevner and Schwab Large-cap go up and down completely randomly.
Pair Corralation between Harding Loevner and Schwab Large-cap
Assuming the 90 days horizon Harding Loevner Emerging is expected to under-perform the Schwab Large-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Harding Loevner Emerging is 1.12 times less risky than Schwab Large-cap. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Schwab Large Cap Growth is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,409 in Schwab Large Cap Growth on September 1, 2024 and sell it today you would earn a total of 176.00 from holding Schwab Large Cap Growth or generate 5.16% 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 Large Cap Growth
Performance |
| Timeline |
| Harding Loevner Emerging |
| Schwab Large Cap |
Harding Loevner and Schwab Large-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Schwab Large-cap
The main advantage of trading using opposite Harding Loevner and Schwab Large-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Schwab Large-cap 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 Large-cap will offset losses from the drop in Schwab Large-cap'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 Large-cap vs. Laudus Large Cap | Schwab Large-cap vs. Schwab Target 2010 | Schwab Large-cap vs. Schwab California Tax Free | Schwab Large-cap vs. Schwab Markettrack Servative |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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