Correlation Between Fidelity Small and Harding Loevner

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

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

Diversification Opportunities for Fidelity Small and Harding Loevner

-0.58

Correlation Coefficient

Fidelity Small  Harding Loevner

Excellent diversification

The 3 months correlation between Fidelity and Harding is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap 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 Fidelity Small 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 Fidelity Small Cap 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 Fidelity Small i.e., Fidelity Small and Harding Loevner go up and down completely randomly.

Pair Corralation between Fidelity Small and Harding Loevner

Assuming the 90 days horizon Fidelity Small Cap is expected to under-perform the Harding Loevner. In addition to that, Fidelity Small is 1.73 times more volatile than Harding Loevner International. It trades about -0.11 of its total potential returns per unit of risk. Harding Loevner International is currently generating about 0.12 per unit of volatility. If you would invest  2,459  in Harding Loevner International on December 30, 2024 and sell it today you would earn a total of  154.00  from holding Harding Loevner International or generate 6.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fidelity Small Cap  vs.  Harding Loevner International

Fidelity Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Harding Loevner may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fidelity Small and Harding Loevner

The main advantage of trading using opposite Fidelity Small and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small 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 Fidelity Small Cap 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 Global Correlations module to find global opportunities by holding instruments from different markets.