Correlation Between State Street and Harding Loevner
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Harding Loevner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Emerging and Harding Loevner Institutional, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Harding Loevner. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Harding Loevner.
Diversification Opportunities for State Street and Harding Loevner
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Harding is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding State Street Emerging and Harding Loevner Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harding Loevner Inst and State Street 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 State Street Emerging 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 Inst has no effect on the direction of State Street i.e., State Street and Harding Loevner go up and down completely randomly.
Pair Corralation between State Street and Harding Loevner
Assuming the 90 days horizon State Street Emerging is expected to generate 0.93 times more return on investment than Harding Loevner. However, State Street Emerging is 1.08 times less risky than Harding Loevner. It trades about -0.02 of its potential returns per unit of risk. Harding Loevner Institutional is currently generating about -0.11 per unit of risk. If you would invest 6,304 in State Street Emerging on January 26, 2024 and sell it today you would lose (27.00) from holding State Street Emerging or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Emerging vs. Harding Loevner Institutional
Performance |
| Timeline |
| State Street Emerging |
| Harding Loevner Inst |
State Street and Harding Loevner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Harding Loevner
The main advantage of trading using opposite State Street and Harding Loevner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Amana Income Fund | State Street vs. Amana Growth Fund | State Street vs. Amana Participation Fund | State Street vs. HUMANA INC |
| Harding Loevner vs. Amana Income Fund | Harding Loevner vs. Amana Growth Fund | Harding Loevner vs. Amana Participation Fund | Harding Loevner vs. HUMANA INC |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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