Correlation Between Vanguard High and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Vanguard High 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 High 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 High Yield Tax Exempt and Harding Loevner Funds, you can compare the effects of market volatilities on Vanguard High 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 High with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard High and Harding Loevner.
Diversification Opportunities for Vanguard High and Harding Loevner
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vanguard and Harding is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Yield Tax Exempt and Harding Loevner Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Funds and Vanguard High 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 High Yield Tax Exempt 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 Funds has no effect on the direction of Vanguard High i.e., Vanguard High and Harding Loevner go up and down completely randomly.
Pair Corralation between Vanguard High and Harding Loevner
Assuming the 90 days horizon Vanguard High Yield Tax Exempt is expected to generate 0.43 times more return on investment than Harding Loevner. However, Vanguard High Yield Tax Exempt is 2.33 times less risky than Harding Loevner. It trades about 0.19 of its potential returns per unit of risk. Harding Loevner Funds is currently generating about -0.1 per unit of risk. If you would invest 1,070 in Vanguard High Yield Tax Exempt on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Vanguard High Yield Tax Exempt or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard High Yield Tax Exempt vs. Harding Loevner Funds
Performance |
| Timeline |
| Vanguard High Yield |
| Harding Loevner Funds |
Vanguard High and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard High and Harding Loevner
The main advantage of trading using opposite Vanguard High and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard High 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 High vs. Vanguard Intermediate Term Tax Exempt | Vanguard High vs. Vanguard Long Term Tax Exempt | Vanguard High vs. Vanguard High Yield Corporate | Vanguard High vs. Vanguard Limited Term Tax Exempt |
| Harding Loevner vs. Aig Government Money | Harding Loevner vs. T Rowe Price | Harding Loevner vs. Franklin Government Money | Harding Loevner vs. Meeder Funds |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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