Correlation Between Harding Loevner and Nicholas
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Nicholas 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 Nicholas 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 Nicholas Ltd Edition, you can compare the effects of market volatilities on Harding Loevner and Nicholas 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 Nicholas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Nicholas.
Diversification Opportunities for Harding Loevner and Nicholas
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harding and Nicholas is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Nicholas Ltd Edition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Edition 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 Nicholas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Edition has no effect on the direction of Harding Loevner i.e., Harding Loevner and Nicholas go up and down completely randomly.
Pair Corralation between Harding Loevner and Nicholas
Assuming the 90 days horizon Harding Loevner Global is expected to generate 0.57 times more return on investment than Nicholas. However, Harding Loevner Global is 1.76 times less risky than Nicholas. It trades about 0.11 of its potential returns per unit of risk. Nicholas Ltd Edition is currently generating about 0.04 per unit of risk. If you would invest 3,436 in Harding Loevner Global on October 24, 2024 and sell it today you would earn a total of 47.00 from holding Harding Loevner Global or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Harding Loevner Global vs. Nicholas Ltd Edition
Performance |
| Timeline |
| Harding Loevner Global |
| Nicholas Edition |
Harding Loevner and Nicholas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Nicholas
The main advantage of trading using opposite Harding Loevner and Nicholas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Nicholas 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 Nicholas will offset losses from the drop in Nicholas' long position.| Harding Loevner vs. Virtus Seix Government | Harding Loevner vs. Elfun Government Money | Harding Loevner vs. Us Government Securities | Harding Loevner vs. Voya Government Money |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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