Correlation Between Commodities Strategy and State Street
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy 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 Commodities Strategy and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and State Street Target, you can compare the effects of market volatilities on Commodities Strategy 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 Commodities Strategy with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and State Street.
Diversification Opportunities for Commodities Strategy and State Street
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commodities and State is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund 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 Commodities Strategy 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 Commodities Strategy Fund 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 Commodities Strategy i.e., Commodities Strategy and State Street go up and down completely randomly.
Pair Corralation between Commodities Strategy and State Street
Assuming the 90 days horizon Commodities Strategy Fund is expected to generate 2.15 times more return on investment than State Street. However, Commodities Strategy is 2.15 times more volatile than State Street Target. It trades about 0.07 of its potential returns per unit of risk. State Street Target is currently generating about 0.11 per unit of risk. If you would invest 2,890 in Commodities Strategy Fund on August 29, 2024 and sell it today you would earn a total of 41.00 from holding Commodities Strategy Fund or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. State Street Target
Performance |
| Timeline |
| Commodities Strategy |
| State Street Target |
Commodities Strategy and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and State Street
The main advantage of trading using opposite Commodities Strategy and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy 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.| Commodities Strategy vs. Pimco Moditiesplus Strategy | Commodities Strategy vs. HUMANA INC | Commodities Strategy vs. Aquagold International | Commodities Strategy vs. Barloworld Ltd ADR |
| State Street vs. Commodities Strategy Fund | State Street vs. Touchstone Sands Capital | State Street vs. Barings Emerging Markets | State Street vs. T Rowe Price |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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