Correlation Between State Street and Locorr Market
Can any of the company-specific risk be diversified away by investing in both State Street and Locorr Market 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 State Street and Locorr Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Premier and Locorr Market Trend, you can compare the effects of market volatilities on State Street and Locorr Market 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 State Street with a short position of Locorr Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Locorr Market.
Diversification Opportunities for State Street and Locorr Market
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Locorr is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding State Street Premier and Locorr Market Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Market Trend and State Street 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 State Street Premier are associated (or correlated) with Locorr Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Market Trend has no effect on the direction of State Street i.e., State Street and Locorr Market go up and down completely randomly.
Pair Corralation between State Street and Locorr Market
Assuming the 90 days horizon State Street Premier is expected to generate 1.15 times more return on investment than Locorr Market. However, State Street is 1.15 times more volatile than Locorr Market Trend. It trades about 0.1 of its potential returns per unit of risk. Locorr Market Trend is currently generating about 0.0 per unit of risk. If you would invest 10,747 in State Street Premier on August 25, 2024 and sell it today you would earn a total of 3,436 from holding State Street Premier or generate 31.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Premier vs. Locorr Market Trend
Performance |
| Timeline |
| State Street Premier |
| Locorr Market Trend |
State Street and Locorr Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Locorr Market
The main advantage of trading using opposite State Street and Locorr Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Locorr Market 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 Locorr Market will offset losses from the drop in Locorr Market's long position.| State Street vs. Vanguard Total Stock | State Street vs. Vanguard 500 Index | State Street vs. Vanguard Total Stock | State Street vs. Vanguard Total Stock |
| Locorr Market vs. Ab High Income | Locorr Market vs. Calvert High Yield | Locorr Market vs. Franklin High Income | Locorr Market vs. Needham Aggressive Growth |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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