Correlation Between Empire State and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Harding Loevner Global, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Harding Loevner.
Diversification Opportunities for Empire State and Harding Loevner
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and HARDING is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Harding Loevner Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Global and Empire State 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 Empire State Realty 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 Global has no effect on the direction of Empire State i.e., Empire State and Harding Loevner go up and down completely randomly.
Pair Corralation between Empire State and Harding Loevner
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.76 times more return on investment than Harding Loevner. However, Empire State is 1.76 times more volatile than Harding Loevner Global. It trades about 0.13 of its potential returns per unit of risk. Harding Loevner Global is currently generating about 0.19 per unit of risk. If you would invest 1,060 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Empire State Realty or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. Harding Loevner Global
Performance |
| Timeline |
| Empire State Realty |
| Harding Loevner Global |
Empire State and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Harding Loevner
The main advantage of trading using opposite Empire State and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Harding Loevner vs. Harding Loevner Global | Harding Loevner vs. Harding Loevner International | Harding Loevner vs. Invesco Disciplined Equity | Harding Loevner vs. Global Stock Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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