Correlation Between Harding Loevner and Kansas Municipal

Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Kansas Municipal 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 Kansas Municipal 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 Kansas Municipal Fund, you can compare the effects of market volatilities on Harding Loevner and Kansas Municipal 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 Kansas Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Kansas Municipal.

Diversification Opportunities for Harding Loevner and Kansas Municipal

0.35

Correlation Coefficient

Harding Loevner  Kansas Municipal

Weak diversification

The 3 months correlation between Harding and Kansas is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Kansas Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansas Municipal 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 Kansas Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansas Municipal has no effect on the direction of Harding Loevner i.e., Harding Loevner and Kansas Municipal go up and down completely randomly.

Pair Corralation between Harding Loevner and Kansas Municipal

Assuming the 90 days horizon Harding Loevner Global is expected to under-perform the Kansas Municipal. In addition to that, Harding Loevner is 3.21 times more volatile than Kansas Municipal Fund. It trades about -0.22 of its total potential returns per unit of risk. Kansas Municipal Fund is currently generating about -0.33 per unit of volatility. If you would invest  974.00  in Kansas Municipal Fund on October 9, 2024 and sell it today you would lose (16.00) from holding Kansas Municipal Fund or give up 1.64% of portfolio value over 90 days.

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

Harding Loevner Global  vs.  Kansas Municipal Fund

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.

Kansas Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kansas Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Kansas Municipal 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 Kansas Municipal

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

The idea behind Harding Loevner Global and Kansas Municipal Fund 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.