Correlation Between Highland Floating and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Highland Floating 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 Highland Floating and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Floating Rate and Harding Loevner Global, you can compare the effects of market volatilities on Highland Floating 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 Highland Floating with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Floating and Harding Loevner.
Diversification Opportunities for Highland Floating and Harding Loevner
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Highland and Harding is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Highland Floating Rate and Harding Loevner Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Global and Highland Floating 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 Highland Floating Rate 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 Global has no effect on the direction of Highland Floating i.e., Highland Floating and Harding Loevner go up and down completely randomly.
Pair Corralation between Highland Floating and Harding Loevner
Assuming the 90 days horizon Highland Floating is expected to generate 1.81 times less return on investment than Harding Loevner. But when comparing it to its historical volatility, Highland Floating Rate is 1.57 times less risky than Harding Loevner. It trades about 0.06 of its potential returns per unit of risk. Harding Loevner Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,310 in Harding Loevner Global on August 26, 2024 and sell it today you would earn a total of 1,108 from holding Harding Loevner Global or generate 33.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Floating Rate vs. Harding Loevner Global
Performance |
| Timeline |
| Highland Floating Rate |
| Harding Loevner Global |
Highland Floating and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Floating and Harding Loevner
The main advantage of trading using opposite Highland Floating and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Floating 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.| Highland Floating vs. Harding Loevner Funds | Highland Floating vs. Harding Loevner Emerging | Highland Floating vs. Harding Loevner Frontier | Highland Floating vs. Harding Loevner International |
| Harding Loevner vs. Harding Loevner Global | Harding Loevner vs. Harding Loevner International | Harding Loevner vs. Invesco Disciplined Equity | Harding Loevner vs. Global Stock Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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