Correlation Between Virtus Kar and Harding Loevner

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

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

Diversification Opportunities for Virtus Kar and Harding Loevner

-0.4

Correlation Coefficient

Virtus Kar  Harding Loevner

Very good diversification

The 3 months correlation between Virtus and Harding is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar 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 Virtus Kar 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 Virtus Kar 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 Virtus Kar i.e., Virtus Kar and Harding Loevner go up and down completely randomly.

Pair Corralation between Virtus Kar and Harding Loevner

Assuming the 90 days horizon Virtus Kar Small Cap is expected to under-perform the Harding Loevner. In addition to that, Virtus Kar is 1.1 times more volatile than Harding Loevner International. It trades about -0.1 of its total potential returns per unit of risk. Harding Loevner International is currently generating about 0.13 per unit of volatility. If you would invest  2,476  in Harding Loevner International on December 24, 2024 and sell it today you would earn a total of  165.00  from holding Harding Loevner International or generate 6.66% return on investment over 90 days.

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

Virtus Kar Small Cap  vs.  Harding Loevner International

Virtus Kar Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Virtus Kar 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harding Loevner International are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Harding Loevner may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Virtus Kar and Harding Loevner

The main advantage of trading using opposite Virtus Kar and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Kar 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 Virtus Kar 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.