Correlation Between The National and State Street
Can any of the company-specific risk be diversified away by investing in both The National and State Street 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 The National and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and State Street Master, you can compare the effects of market volatilities on The National and State Street 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 The National with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and State Street.
Diversification Opportunities for The National and State Street
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between The and State is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and State Street Master in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Master and The National 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 The National Tax Free are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Master has no effect on the direction of The National i.e., The National and State Street go up and down completely randomly.
Pair Corralation between The National and State Street
Assuming the 90 days horizon The National is expected to generate 1.78 times less return on investment than State Street. In addition to that, The National is 1.38 times more volatile than State Street Master. It trades about 0.05 of its total potential returns per unit of risk. State Street Master is currently generating about 0.13 per unit of volatility. If you would invest 96.00 in State Street Master on December 4, 2024 and sell it today you would earn a total of 4.00 from holding State Street Master or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.0% |
| Values | Daily Returns |
The National Tax Free vs. State Street Master
Performance |
| Timeline |
| National Tax |
| State Street Master |
The National and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and State Street
The main advantage of trading using opposite The National and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| The National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
| State Street vs. Buffalo High Yield | State Street vs. T Rowe Price | State Street vs. Neuberger Berman Income | State Street vs. Siit High Yield |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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