Correlation Between Harding Loevner and Virtus Dfa

Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Virtus Dfa 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 Virtus Dfa 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 Virtus Dfa 2040, you can compare the effects of market volatilities on Harding Loevner and Virtus Dfa 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 Virtus Dfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Virtus Dfa.

Diversification Opportunities for Harding Loevner and Virtus Dfa

0.26

Correlation Coefficient

Harding Loevner  Virtus Dfa

Modest diversification

The 3 months correlation between Harding and Virtus is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Virtus Dfa 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Dfa 2040 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 Virtus Dfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Dfa 2040 has no effect on the direction of Harding Loevner i.e., Harding Loevner and Virtus Dfa go up and down completely randomly.

Pair Corralation between Harding Loevner and Virtus Dfa

Assuming the 90 days horizon Harding Loevner Global is expected to generate 0.33 times more return on investment than Virtus Dfa. However, Harding Loevner Global is 3.02 times less risky than Virtus Dfa. It trades about -0.21 of its potential returns per unit of risk. Virtus Dfa 2040 is currently generating about -0.29 per unit of risk. If you would invest  3,511  in Harding Loevner Global on October 10, 2024 and sell it today you would lose (124.00) from holding Harding Loevner Global or give up 3.53% 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.  Virtus Dfa 2040

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.

Virtus Dfa 2040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dfa 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Harding Loevner and Virtus Dfa

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

The idea behind Harding Loevner Global and Virtus Dfa 2040 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.