Correlation Between Davis Financial and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Davis Financial 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 Davis Financial and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and Harding Loevner Global, you can compare the effects of market volatilities on Davis Financial 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 Davis Financial with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Harding Loevner.
Diversification Opportunities for Davis Financial and Harding Loevner
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Davis and Harding is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial 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 Davis Financial 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 Davis Financial 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 Davis Financial i.e., Davis Financial and Harding Loevner go up and down completely randomly.
Pair Corralation between Davis Financial and Harding Loevner
Assuming the 90 days horizon Davis Financial Fund is expected to generate 2.07 times more return on investment than Harding Loevner. However, Davis Financial is 2.07 times more volatile than Harding Loevner Global. It trades about 0.34 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 6,393 in Davis Financial Fund on September 4, 2024 and sell it today you would earn a total of 686.00 from holding Davis Financial Fund or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Davis Financial Fund vs. Harding Loevner Global
Performance |
| Timeline |
| Davis Financial |
| Harding Loevner Global |
Davis Financial and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Harding Loevner
The main advantage of trading using opposite Davis Financial and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial 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.| Davis Financial vs. Multimanager Lifestyle Aggressive | Davis Financial vs. Gmo High Yield | Davis Financial vs. Siit High Yield | Davis Financial vs. Guggenheim High Yield |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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