Correlation Between Harding Loevner and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harding Loevner Frontier and Dow Jones Industrial, you can compare the effects of market volatilities on Harding Loevner and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Dow Jones.
Diversification Opportunities for Harding Loevner and Dow Jones
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harding and Dow is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Frontier and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Frontier are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Harding Loevner i.e., Harding Loevner and Dow Jones go up and down completely randomly.
Pair Corralation between Harding Loevner and Dow Jones
Assuming the 90 days horizon Harding Loevner is expected to generate 1.79 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Harding Loevner Frontier is 1.25 times less risky than Dow Jones. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,361,869 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 1,110,337 from holding Dow Jones Industrial or generate 33.03% 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 Frontier vs. Dow Jones Industrial
Performance |
| Timeline |
Harding Loevner and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Harding Loevner Frontier
Pair trading matchups for Harding Loevner
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Harding Loevner and Dow Jones
The main advantage of trading using opposite Harding Loevner and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Harding Loevner vs. Vanguard Emerging Markets | Harding Loevner vs. Vanguard Emerging Markets | Harding Loevner vs. HUMANA INC | Harding Loevner vs. Aquagold International |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |