Correlation Between Harding Loevner and Prudential California
Can any of the company-specific risk be diversified away by investing in both Harding Loevner and Prudential California 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 Prudential California 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 Prudential California Muni, you can compare the effects of market volatilities on Harding Loevner and Prudential California 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 Prudential California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Prudential California.
Diversification Opportunities for Harding Loevner and Prudential California
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harding and Prudential is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Prudential California Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential California 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 Prudential California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential California has no effect on the direction of Harding Loevner i.e., Harding Loevner and Prudential California go up and down completely randomly.
Pair Corralation between Harding Loevner and Prudential California
Assuming the 90 days horizon Harding Loevner Global is expected to generate 6.81 times more return on investment than Prudential California. However, Harding Loevner is 6.81 times more volatile than Prudential California Muni. It trades about 0.09 of its potential returns per unit of risk. Prudential California Muni is currently generating about 0.25 per unit of risk. If you would invest 3,538 in Harding Loevner Global on May 28, 2025 and sell it today you would earn a total of 131.00 from holding Harding Loevner Global or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harding Loevner Global vs. Prudential California Muni
Performance |
| Timeline |
| Harding Loevner Global |
| Prudential California |
Harding Loevner and Prudential California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harding Loevner and Prudential California
The main advantage of trading using opposite Harding Loevner and Prudential California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harding Loevner position performs unexpectedly, Prudential California 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 Prudential California will offset losses from the drop in Prudential California's long position.| Harding Loevner vs. Harding Loevner Emerging | Harding Loevner vs. Harding Loevner Institutional | Harding Loevner vs. Harding Loevner Frontier | Harding Loevner vs. Harding Loevner Frontier |
| Prudential California vs. Balanced Strategy Fund | Prudential California vs. Dodge Cox Emerging | Prudential California vs. Rbc Emerging Markets | Prudential California vs. Ab Tax Managed Wealth |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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