Correlation Between Us Government and State Street
Can any of the company-specific risk be diversified away by investing in both Us 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 Us 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 Us Government Plus and State Street Global, you can compare the effects of market volatilities on Us 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 Us Government with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and State Street.
Diversification Opportunities for Us Government and State Street
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GVPIX and State is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Plus and State Street Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Global and Us 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 Us Government Plus 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 Global has no effect on the direction of Us Government i.e., Us Government and State Street go up and down completely randomly.
Pair Corralation between Us Government and State Street
Assuming the 90 days horizon Us Government Plus is expected to under-perform the State Street. In addition to that, Us Government is 1.68 times more volatile than State Street Global. It trades about -0.02 of its total potential returns per unit of risk. State Street Global is currently generating about 0.05 per unit of volatility. If you would invest 10,203 in State Street Global on August 31, 2024 and sell it today you would earn a total of 1,837 from holding State Street Global or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Us Government Plus vs. State Street Global
Performance |
| Timeline |
| Us Government Plus |
| State Street Global |
Us Government and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and State Street
The main advantage of trading using opposite Us Government and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us 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.| Us Government vs. Us Government Plus | Us Government vs. HUMANA INC | Us Government vs. Aquagold International | Us Government vs. Barloworld Ltd ADR |
| State Street vs. Us Government Securities | State Street vs. Franklin Adjustable Government | State Street vs. Blackrock Government Bond | State Street vs. Us Government Plus |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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