Correlation Between Ishares Msci and Harding Loevner

Can any of the company-specific risk be diversified away by investing in both Ishares Msci 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 Ishares Msci and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ishares Msci Eafe and Harding Loevner International, you can compare the effects of market volatilities on Ishares Msci 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 Ishares Msci with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Msci and Harding Loevner.

Diversification Opportunities for Ishares Msci and Harding Loevner

0.83

Correlation Coefficient

Ishares Msci  Harding Loevner

Very poor diversification

The 3 months correlation between Ishares and Harding is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Msci Eafe 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 Ishares Msci 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 Ishares Msci Eafe 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 Ishares Msci i.e., Ishares Msci and Harding Loevner go up and down completely randomly.

Pair Corralation between Ishares Msci and Harding Loevner

Assuming the 90 days horizon Ishares Msci Eafe is expected to generate 1.06 times more return on investment than Harding Loevner. However, Ishares Msci is 1.06 times more volatile than Harding Loevner International. It trades about 0.06 of its potential returns per unit of risk. Harding Loevner International is currently generating about 0.01 per unit of risk. If you would invest  1,447  in Ishares Msci Eafe on November 20, 2024 and sell it today you would earn a total of  186.00  from holding Ishares Msci Eafe or generate 12.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ishares Msci Eafe  vs.  Harding Loevner International

Ishares Msci Eafe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Msci Eafe are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ishares Msci may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Harding Loevner Inte

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harding Loevner International are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Harding Loevner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ishares Msci and Harding Loevner

The main advantage of trading using opposite Ishares Msci and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Msci 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.

The idea behind Ishares Msci Eafe and Harding Loevner International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..