Correlation Between Performance Trust and Harding Loevner

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

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

Diversification Opportunities for Performance Trust and Harding Loevner

0.68

Correlation Coefficient

Performance Trust  Harding Loevner

Poor diversification

The 3 months correlation between Performance and Harding is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Performance Trust Strategic 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 Performance Trust 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 Performance Trust Strategic 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 Performance Trust i.e., Performance Trust and Harding Loevner go up and down completely randomly.

Pair Corralation between Performance Trust and Harding Loevner

Assuming the 90 days horizon Performance Trust Strategic is expected to generate 0.4 times more return on investment than Harding Loevner. However, Performance Trust Strategic is 2.49 times less risky than Harding Loevner. It trades about 0.05 of its potential returns per unit of risk. Harding Loevner International is currently generating about 0.02 per unit of risk. If you would invest  1,801  in Performance Trust Strategic on October 27, 2024 and sell it today you would earn a total of  148.00  from holding Performance Trust Strategic or generate 8.22% return on investment over 90 days.

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

Performance Trust Strategic  vs.  Harding Loevner International

Performance Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Harding Loevner Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harding Loevner International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Performance Trust and Harding Loevner

The main advantage of trading using opposite Performance Trust and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Trust 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 Performance Trust Strategic 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.