Correlation Between Harding Loevner and American Funds
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harding Loevner Global and American Funds 2065, you can compare the effects of market volatilities on Harding Loevner and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and American Funds.
Diversification Opportunities for Harding Loevner and American Funds
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harding and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 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 Global are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2065 has no effect on the direction of Harding Loevner i.e., Harding Loevner and American Funds go up and down completely randomly.
Pair Corralation between Harding Loevner and American Funds
Assuming the 90 days horizon Harding Loevner Global is expected to under-perform the American Funds. In addition to that, Harding Loevner is 2.45 times more volatile than American Funds 2065. It trades about -0.03 of its total potential returns per unit of risk. American Funds 2065 is currently generating about 0.06 per unit of volatility. If you would invest 1,653 in American Funds 2065 on October 25, 2024 and sell it today you would earn a total of 154.00 from holding American Funds 2065 or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harding Loevner Global vs. American Funds 2065
Performance |
| Timeline |
| Harding Loevner Global |
| American Funds 2065 |
Harding Loevner and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and American Funds
The main advantage of trading using opposite Harding Loevner and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Harding Loevner vs. Absolute Convertible Arbitrage | Harding Loevner vs. Rationalpier 88 Convertible | Harding Loevner vs. Advent Claymore Convertible | Harding Loevner vs. Calamos Dynamic Convertible |
| American Funds vs. Goldman Sachs Smallmid | American Funds vs. Ab Small Cap | American Funds vs. Ab Small Cap | American Funds vs. Nuveen Small Cap |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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