Correlation Between Prudential Jennison and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Prudential Jennison 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 Prudential Jennison and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Jennison International and Harding Loevner International, you can compare the effects of market volatilities on Prudential Jennison 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 Prudential Jennison with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Jennison and Harding Loevner.
Diversification Opportunities for Prudential Jennison and Harding Loevner
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prudential and Harding is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Jennison Internatio 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 Prudential Jennison 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 Prudential Jennison International 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 Prudential Jennison i.e., Prudential Jennison and Harding Loevner go up and down completely randomly.
Pair Corralation between Prudential Jennison and Harding Loevner
Assuming the 90 days horizon Prudential Jennison International is expected to under-perform the Harding Loevner. In addition to that, Prudential Jennison is 1.33 times more volatile than Harding Loevner International. It trades about -0.47 of its total potential returns per unit of risk. Harding Loevner International is currently generating about -0.43 per unit of volatility. If you would invest 2,660 in Harding Loevner International on January 20, 2024 and sell it today you would lose (144.00) from holding Harding Loevner International or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Jennison Internatio vs. Harding Loevner International
Performance |
| Timeline |
| Prudential Jennison |
| Harding Loevner Inte |
Prudential Jennison and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Jennison and Harding Loevner
The main advantage of trading using opposite Prudential Jennison and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Jennison 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 Prudential Jennison International 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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Check out your portfolio center.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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