Correlation Between M Large and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both M Large and Harding Loevner 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 M Large and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Large Cap and Harding Loevner International, you can compare the effects of market volatilities on M Large and Harding Loevner 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 M Large with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Harding Loevner.
Diversification Opportunities for M Large and Harding Loevner
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MTCGX and Harding is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Harding Loevner International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Inte and M Large 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 M Large Cap are associated (or correlated) with Harding Loevner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harding Loevner Inte has no effect on the direction of M Large i.e., M Large and Harding Loevner go up and down completely randomly.
Pair Corralation between M Large and Harding Loevner
Assuming the 90 days horizon M Large Cap is expected to generate 1.51 times more return on investment than Harding Loevner. However, M Large is 1.51 times more volatile than Harding Loevner International. It trades about 0.08 of its potential returns per unit of risk. Harding Loevner International is currently generating about 0.03 per unit of risk. If you would invest 2,670 in M Large Cap on September 2, 2024 and sell it today you would earn a total of 1,021 from holding M Large Cap or generate 38.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M Large Cap vs. Harding Loevner International
Performance |
| Timeline |
| M Large Cap |
| Harding Loevner Inte |
M Large and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Large and Harding Loevner
The main advantage of trading using opposite M Large and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Large position performs unexpectedly, Harding Loevner 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 Harding Loevner will offset losses from the drop in Harding Loevner's long position.| M Large vs. Prudential Real Estate | M Large vs. Jhancock Real Estate | M Large vs. Great West Real Estate | M Large vs. Fidelity Real Estate |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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