Correlation Between OFS Credit and State Street
Can any of the company-specific risk be diversified away by investing in both OFS Credit 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 OFS Credit and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Credit and State Street, you can compare the effects of market volatilities on OFS Credit 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 OFS Credit with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Credit and State Street.
Diversification Opportunities for OFS Credit and State Street
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between OFS and State is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding OFS Credit and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street and OFS Credit 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 OFS Credit 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 has no effect on the direction of OFS Credit i.e., OFS Credit and State Street go up and down completely randomly.
Pair Corralation between OFS Credit and State Street
Assuming the 90 days horizon OFS Credit is expected to generate 0.91 times more return on investment than State Street. However, OFS Credit is 1.1 times less risky than State Street. It trades about 0.05 of its potential returns per unit of risk. State Street is currently generating about -0.08 per unit of risk. If you would invest 2,467 in OFS Credit on August 31, 2024 and sell it today you would earn a total of 11.00 from holding OFS Credit or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Credit vs. State Street
Performance |
| Timeline |
| OFS Credit |
| State Street |
OFS Credit and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Credit and State Street
The main advantage of trading using opposite OFS Credit and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Credit 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.| OFS Credit vs. The Gabelli Equity | OFS Credit vs. The Gabelli Equity | OFS Credit vs. The Gabelli Utility | OFS Credit vs. Bancroft Fund |
| State Street vs. The Gabelli Equity | State Street vs. The Gabelli Multimedia | State Street vs. The Gabelli Equity | State Street vs. Virtus AllianzGI Convertible |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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