Correlation Between Schwab Small-cap and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Schwab Small-cap 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 Schwab Small-cap and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Small Cap Equity and Harding Loevner Emerging, you can compare the effects of market volatilities on Schwab Small-cap 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 Schwab Small-cap with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Small-cap and Harding Loevner.
Diversification Opportunities for Schwab Small-cap and Harding Loevner
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Schwab and Harding is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Small Cap Equity and Harding Loevner Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Emerging and Schwab Small-cap 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 Schwab Small Cap Equity 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 Emerging has no effect on the direction of Schwab Small-cap i.e., Schwab Small-cap and Harding Loevner go up and down completely randomly.
Pair Corralation between Schwab Small-cap and Harding Loevner
Assuming the 90 days horizon Schwab Small Cap Equity is expected to generate 1.31 times more return on investment than Harding Loevner. However, Schwab Small-cap is 1.31 times more volatile than Harding Loevner Emerging. It trades about 0.02 of its potential returns per unit of risk. Harding Loevner Emerging is currently generating about -0.01 per unit of risk. If you would invest 1,685 in Schwab Small Cap Equity on November 28, 2024 and sell it today you would earn a total of 196.00 from holding Schwab Small Cap Equity or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Small Cap Equity vs. Harding Loevner Emerging
Performance |
| Timeline |
| Schwab Small Cap |
| Harding Loevner Emerging |
Schwab Small-cap and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Small-cap and Harding Loevner
The main advantage of trading using opposite Schwab Small-cap and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Small-cap 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.| Schwab Small-cap vs. Goldman Sachs High | Schwab Small-cap vs. Mesirow Financial High | Schwab Small-cap vs. Alpine High Yield | Schwab Small-cap vs. Aqr Alternative Risk |
| Harding Loevner vs. Ssga International Stock | Harding Loevner vs. Schwab E Equity | Harding Loevner vs. Driehaus Emerging Markets | Harding Loevner vs. Columbia Emerging Markets |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |