Correlation Between New Perspective and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both New Perspective 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 New Perspective and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Harding Loevner Global, you can compare the effects of market volatilities on New Perspective 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 New Perspective with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Harding Loevner.
Diversification Opportunities for New Perspective and Harding Loevner
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and HARDING is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Harding Loevner Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Global and New Perspective 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 New Perspective Fund 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 Global has no effect on the direction of New Perspective i.e., New Perspective and Harding Loevner go up and down completely randomly.
Pair Corralation between New Perspective and Harding Loevner
Assuming the 90 days horizon New Perspective Fund is expected to generate 0.87 times more return on investment than Harding Loevner. However, New Perspective Fund is 1.14 times less risky than Harding Loevner. It trades about 0.24 of its potential returns per unit of risk. Harding Loevner Global is currently generating about 0.2 per unit of risk. If you would invest 6,009 in New Perspective Fund on September 4, 2024 and sell it today you would earn a total of 197.00 from holding New Perspective Fund or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Harding Loevner Global
Performance |
| Timeline |
| New Perspective |
| Harding Loevner Global |
New Perspective and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Harding Loevner
The main advantage of trading using opposite New Perspective and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective 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.| New Perspective vs. Rationalpier 88 Convertible | New Perspective vs. Advent Claymore Convertible | New Perspective vs. Allianzgi Convertible Income | New Perspective vs. Putnam Convertible Incm Gwth |
| Harding Loevner vs. Harding Loevner International | Harding Loevner vs. Harding Loevner International | Harding Loevner vs. Amg Timessquare International | Harding Loevner vs. Harding Loevner International |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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