Correlation Between Harding Loevner and Catholic Values

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

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

Diversification Opportunities for Harding Loevner and Catholic Values

0.24

Correlation Coefficient

Harding Loevner  Catholic Values

Modest diversification

The 3 months correlation between Harding and Catholic is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Catholic Values Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catholic Values Fixed and Harding Loevner 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 Harding Loevner Global are associated (or correlated) with Catholic Values. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catholic Values Fixed has no effect on the direction of Harding Loevner i.e., Harding Loevner and Catholic Values go up and down completely randomly.

Pair Corralation between Harding Loevner and Catholic Values

Assuming the 90 days horizon Harding Loevner Global is expected to generate 1.99 times more return on investment than Catholic Values. However, Harding Loevner is 1.99 times more volatile than Catholic Values Fixed. It trades about 0.08 of its potential returns per unit of risk. Catholic Values Fixed is currently generating about 0.02 per unit of risk. If you would invest  2,431  in Harding Loevner Global on October 9, 2024 and sell it today you would earn a total of  956.00  from holding Harding Loevner Global or generate 39.33% return on investment over 90 days.

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

Harding Loevner Global  vs.  Catholic Values Fixed

Harding Loevner Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harding Loevner Global has generated negative risk-adjusted returns adding no value to fund investors. 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.

Catholic Values Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catholic Values Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Catholic Values is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harding Loevner and Catholic Values

The main advantage of trading using opposite Harding Loevner and Catholic Values positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Catholic Values 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 Catholic Values will offset losses from the drop in Catholic Values' long position.

The idea behind Harding Loevner Global and Catholic Values Fixed 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.