Correlation Between State Street and Cref Money
Can any of the company-specific risk be diversified away by investing in both State Street and Cref Money 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 Cref Money 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 Cref Money Market, you can compare the effects of market volatilities on State Street and Cref Money 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 Cref Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Cref Money.
Diversification Opportunities for State Street and Cref Money
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between State and Cref is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding State Street Premier and Cref Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Money Market 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 Cref Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Money Market has no effect on the direction of State Street i.e., State Street and Cref Money go up and down completely randomly.
Pair Corralation between State Street and Cref Money
Assuming the 90 days horizon State Street Premier is expected to generate 54.64 times more return on investment than Cref Money. However, State Street is 54.64 times more volatile than Cref Money Market. It trades about 0.11 of its potential returns per unit of risk. Cref Money Market is currently generating about 0.97 per unit of risk. If you would invest 10,807 in State Street Premier on September 2, 2024 and sell it today you would earn a total of 3,556 from holding State Street Premier or generate 32.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Premier vs. Cref Money Market
Performance |
| Timeline |
| State Street Premier |
| Cref Money Market |
State Street and Cref Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Cref Money
The main advantage of trading using opposite State Street and Cref Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Cref Money 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 Cref Money will offset losses from the drop in Cref Money's long position.| State Street vs. Cref Money Market | State Street vs. T Rowe Price | State Street vs. Blackrock Exchange Portfolio | State Street vs. Franklin Government Money |
| Cref Money vs. Tfa Alphagen Growth | Cref Money vs. L Abbett Growth | Cref Money vs. Nationwide Growth Fund | Cref Money vs. Growth Opportunities Fund |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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