Correlation Between SL Green and Loar Holdings

Can any of the company-specific risk be diversified away by investing in both SL Green and Loar Holdings 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 SL Green and Loar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SL Green Realty and Loar Holdings, you can compare the effects of market volatilities on SL Green and Loar Holdings 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 SL Green with a short position of Loar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Loar Holdings.

Diversification Opportunities for SL Green and Loar Holdings

0.74

Correlation Coefficient

SL Green  Loar Holdings

Poor diversification

The 3 months correlation between SLG and Loar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings and SL Green 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 SL Green Realty are associated (or correlated) with Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of SL Green i.e., SL Green and Loar Holdings go up and down completely randomly.

Pair Corralation between SL Green and Loar Holdings

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Loar Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 1.21 times less risky than Loar Holdings. The stock trades about -0.11 of its potential returns per unit of risk. The Loar Holdings is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  7,429  in Loar Holdings on December 23, 2024 and sell it today you would lose (932.00) from holding Loar Holdings or give up 12.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SL Green Realty  vs.  Loar Holdings

SL Green Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Loar Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with SL Green and Loar Holdings

The main advantage of trading using opposite SL Green and Loar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Loar Holdings 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 Loar Holdings will offset losses from the drop in Loar Holdings' long position.

The idea behind SL Green Realty and Loar Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.