Correlation Between Harding Loevner and Short Term
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Short Term 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 Short Term 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 Short Term Government Fund, you can compare the effects of market volatilities on Harding Loevner and Short Term 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 Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Short Term.
Diversification Opportunities for Harding Loevner and Short Term
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harding and Short is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of Harding Loevner i.e., Harding Loevner and Short Term go up and down completely randomly.
Pair Corralation between Harding Loevner and Short Term
Assuming the 90 days horizon Harding Loevner Global is expected to generate 6.97 times more return on investment than Short Term. However, Harding Loevner is 6.97 times more volatile than Short Term Government Fund. It trades about 0.12 of its potential returns per unit of risk. Short Term Government Fund is currently generating about 0.12 per unit of risk. If you would invest 3,462 in Harding Loevner Global on October 25, 2024 and sell it today you would earn a total of 52.00 from holding Harding Loevner Global or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harding Loevner Global vs. Short Term Government Fund
Performance |
| Timeline |
| Harding Loevner Global |
| Short Term Government |
Harding Loevner and Short Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Short Term
The main advantage of trading using opposite Harding Loevner and Short Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Short Term 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 Short Term will offset losses from the drop in Short Term's 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 |
| Short Term vs. Qs Large Cap | Short Term vs. Rational Strategic Allocation | Short Term vs. Fisher Large Cap | Short Term vs. Tax Managed Large 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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