Correlation Between Vanguard Value and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Vanguard Value and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and Harding Loevner International, you can compare the effects of market volatilities on Vanguard Value 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 Vanguard Value with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Harding Loevner.
Diversification Opportunities for Vanguard Value and Harding Loevner
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Harding is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index 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 Vanguard Value 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 Vanguard Value Index 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 Vanguard Value i.e., Vanguard Value and Harding Loevner go up and down completely randomly.
Pair Corralation between Vanguard Value and Harding Loevner
Assuming the 90 days horizon Vanguard Value Index is expected to generate 0.92 times more return on investment than Harding Loevner. However, Vanguard Value Index is 1.09 times less risky than Harding Loevner. It trades about 0.09 of its potential returns per unit of risk. Harding Loevner International is currently generating about 0.02 per unit of risk. If you would invest 5,259 in Vanguard Value Index on August 30, 2024 and sell it today you would earn a total of 1,816 from holding Vanguard Value Index or generate 34.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. Harding Loevner International
Performance |
| Timeline |
| Vanguard Value Index |
| Harding Loevner Inte |
Vanguard Value and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Harding Loevner
The main advantage of trading using opposite Vanguard Value and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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.| Vanguard Value vs. Dodge Cox Stock | Vanguard Value vs. American Mutual Fund | Vanguard Value vs. American Funds American | Vanguard Value vs. American Funds American |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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