Correlation Between Harding Loevner and Aggressive Growth
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Aggressive Growth 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 Aggressive Growth 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 Aggressive Growth Allocation, you can compare the effects of market volatilities on Harding Loevner and Aggressive Growth 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 Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Aggressive Growth.
Diversification Opportunities for Harding Loevner and Aggressive Growth
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harding and Aggressive is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Aggressive Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Harding Loevner i.e., Harding Loevner and Aggressive Growth go up and down completely randomly.
Pair Corralation between Harding Loevner and Aggressive Growth
Assuming the 90 days horizon Harding Loevner Global is expected to generate 1.28 times more return on investment than Aggressive Growth. However, Harding Loevner is 1.28 times more volatile than Aggressive Growth Allocation. It trades about 0.06 of its potential returns per unit of risk. Aggressive Growth Allocation is currently generating about 0.08 per unit of risk. If you would invest 2,654 in Harding Loevner Global on October 14, 2024 and sell it today you would earn a total of 755.00 from holding Harding Loevner Global or generate 28.45% 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. Aggressive Growth Allocation
Performance |
| Timeline |
| Harding Loevner Global |
| Aggressive Growth |
Harding Loevner and Aggressive Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Aggressive Growth
The main advantage of trading using opposite Harding Loevner and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Aggressive Growth 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.| Harding Loevner vs. Elfun Government Money | Harding Loevner vs. Putnam Money Market | Harding Loevner vs. Ab Government Exchange | Harding Loevner vs. Hewitt Money Market |
| Aggressive Growth vs. Harding Loevner Global | Aggressive Growth vs. Artisan Global Opportunities | Aggressive Growth vs. Morgan Stanley Global | Aggressive Growth vs. Ms Global Fixed |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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