Correlation Between Nasdaq-100(r) and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) 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 Nasdaq-100(r) and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Harding Loevner Frontier, you can compare the effects of market volatilities on Nasdaq-100(r) 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 Nasdaq-100(r) with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Harding Loevner.
Diversification Opportunities for Nasdaq-100(r) and Harding Loevner
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq-100(r) and Harding is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Harding Loevner Frontier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Frontier and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Frontier has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Harding Loevner go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Harding Loevner
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 5.77 times more return on investment than Harding Loevner. However, Nasdaq-100(r) is 5.77 times more volatile than Harding Loevner Frontier. It trades about 0.03 of its potential returns per unit of risk. Harding Loevner Frontier is currently generating about -0.24 per unit of risk. If you would invest 56,375 in Nasdaq 100 2x Strategy on August 30, 2024 and sell it today you would earn a total of 675.00 from holding Nasdaq 100 2x Strategy or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Harding Loevner Frontier
Performance |
| Timeline |
| Nasdaq 100 2x |
| Harding Loevner Frontier |
Nasdaq-100(r) and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Harding Loevner
The main advantage of trading using opposite Nasdaq-100(r) and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) 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.| Nasdaq-100(r) vs. Direxion Monthly Nasdaq 100 | Nasdaq-100(r) vs. HUMANA INC | Nasdaq-100(r) vs. Aquagold International | Nasdaq-100(r) vs. Barloworld Ltd ADR |
| Harding Loevner vs. The Hartford Equity | Harding Loevner vs. Doubleline E Fixed | Harding Loevner vs. Locorr Dynamic Equity | Harding Loevner vs. Touchstone International Equity |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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