Correlation Between Versatile Bond and State Street
Can any of the company-specific risk be diversified away by investing in both Versatile Bond 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 Versatile Bond and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versatile Bond Portfolio and State Street Global, you can compare the effects of market volatilities on Versatile Bond 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 Versatile Bond with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versatile Bond and State Street.
Diversification Opportunities for Versatile Bond and State Street
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Versatile and State is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio 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 Versatile Bond 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 Versatile Bond Portfolio 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 Versatile Bond i.e., Versatile Bond and State Street go up and down completely randomly.
Pair Corralation between Versatile Bond and State Street
Assuming the 90 days horizon Versatile Bond is expected to generate 1.76 times less return on investment than State Street. But when comparing it to its historical volatility, Versatile Bond Portfolio is 5.32 times less risky than State Street. It trades about 0.18 of its potential returns per unit of risk. State Street Global is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,853 in State Street Global on September 2, 2024 and sell it today you would earn a total of 2,245 from holding State Street Global or generate 22.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Versatile Bond Portfolio vs. State Street Global
Performance |
| Timeline |
| Versatile Bond Portfolio |
| State Street Global |
Versatile Bond and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versatile Bond and State Street
The main advantage of trading using opposite Versatile Bond and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond 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.| Versatile Bond vs. Short Term Treasury Portfolio | Versatile Bond vs. Aggressive Growth Portfolio | Versatile Bond vs. Permanent Portfolio Class | Versatile Bond vs. Thompson Bond Fund |
| State Street vs. Inflation Protected Bond Fund | State Street vs. Versatile Bond Portfolio | State Street vs. Federated Ohio Municipal | State Street vs. Multisector Bond Sma |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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