Correlation Between Elfun Government and State Street
Can any of the company-specific risk be diversified away by investing in both Elfun Government 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 Elfun Government and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and State Street Target, you can compare the effects of market volatilities on Elfun Government 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 Elfun Government with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and State Street.
Diversification Opportunities for Elfun Government and State Street
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elfun and State is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target and Elfun Government 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 Elfun Government Money 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 Target has no effect on the direction of Elfun Government i.e., Elfun Government and State Street go up and down completely randomly.
Pair Corralation between Elfun Government and State Street
Assuming the 90 days horizon Elfun Government is expected to generate 9.53 times less return on investment than State Street. But when comparing it to its historical volatility, Elfun Government Money is 3.54 times less risky than State Street. It trades about 0.04 of its potential returns per unit of risk. State Street Target is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,493 in State Street Target on September 12, 2024 and sell it today you would earn a total of 144.00 from holding State Street Target or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Elfun Government Money vs. State Street Target
Performance |
| Timeline |
| Elfun Government Money |
| State Street Target |
Elfun Government and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Government and State Street
The main advantage of trading using opposite Elfun Government and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government 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.| Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard 500 Index | Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard Total Stock |
| State Street vs. Elfun Government Money | State Street vs. Cref Money Market | State Street vs. Ab Government Exchange | State Street vs. Hsbc Treasury Money |
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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