Correlation Between Harding Loevner and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Arrow Managed 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 Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harding Loevner Frontier and Arrow Managed Futures, you can compare the effects of market volatilities on Harding Loevner and Arrow Managed 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 Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Arrow Managed.
Diversification Opportunities for Harding Loevner and Arrow Managed
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harding and Arrow is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Frontier and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures 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 Frontier are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Harding Loevner i.e., Harding Loevner and Arrow Managed go up and down completely randomly.
Pair Corralation between Harding Loevner and Arrow Managed
Assuming the 90 days horizon Harding Loevner Frontier is expected to generate 0.36 times more return on investment than Arrow Managed. However, Harding Loevner Frontier is 2.75 times less risky than Arrow Managed. It trades about 0.07 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about -0.01 per unit of risk. If you would invest 723.00 in Harding Loevner Frontier on September 2, 2024 and sell it today you would earn a total of 101.00 from holding Harding Loevner Frontier or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Harding Loevner Frontier vs. Arrow Managed Futures
Performance |
| Timeline |
| Harding Loevner Frontier |
| Arrow Managed Futures |
Harding Loevner and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Arrow Managed
The main advantage of trading using opposite Harding Loevner and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed's long position.| Harding Loevner vs. Harding Loevner Funds | Harding Loevner vs. Harding Loevner Emerging | Harding Loevner vs. Harding Loevner Institutional | Harding Loevner vs. Harding Loevner Global |
| Arrow Managed vs. Fidelity Advisor Technology | Arrow Managed vs. Biotechnology Ultrasector Profund | Arrow Managed vs. Biotechnology Fund Class |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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