Correlation Between Harding Loevner and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Global, you can compare the effects of market volatilities on Harding Loevner and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Franklin Mutual.
Diversification Opportunities for Harding Loevner and Franklin Mutual
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harding and Franklin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Frontier and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Harding Loevner i.e., Harding Loevner and Franklin Mutual go up and down completely randomly.
Pair Corralation between Harding Loevner and Franklin Mutual
Assuming the 90 days horizon Harding Loevner Frontier is expected to under-perform the Franklin Mutual. But the mutual fund apears to be less risky and, when comparing its historical volatility, Harding Loevner Frontier is 1.3 times less risky than Franklin Mutual. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Franklin Mutual Global is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,136 in Franklin Mutual Global on September 4, 2024 and sell it today you would earn a total of 73.00 from holding Franklin Mutual Global or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harding Loevner Frontier vs. Franklin Mutual Global
Performance |
| Timeline |
| Harding Loevner Frontier |
| Franklin Mutual Global |
Harding Loevner and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Franklin Mutual
The main advantage of trading using opposite Harding Loevner and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.| Harding Loevner vs. Harding Loevner Funds | Harding Loevner vs. Harding Loevner Emerging | Harding Loevner vs. Harding Loevner Institutional | Harding Loevner vs. Harding Loevner Global |
| Franklin Mutual vs. Franklin Mutual Beacon | Franklin Mutual vs. Templeton Developing Markets | Franklin Mutual vs. Franklin Mutual Global | Franklin Mutual vs. Templeton Foreign Fund |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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