Correlation Between State Street and Quantified Market
Can any of the company-specific risk be diversified away by investing in both State Street and Quantified 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 Quantified 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 Quantified Market Leaders, you can compare the effects of market volatilities on State Street and Quantified 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 Quantified Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Quantified Market.
Diversification Opportunities for State Street and Quantified Market
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Quantified is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding State Street Premier and Quantified Market Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantified Market Leaders 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 Quantified Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantified Market Leaders has no effect on the direction of State Street i.e., State Street and Quantified Market go up and down completely randomly.
Pair Corralation between State Street and Quantified Market
Assuming the 90 days horizon State Street is expected to generate 4.87 times less return on investment than Quantified Market. But when comparing it to its historical volatility, State Street Premier is 1.42 times less risky than Quantified Market. It trades about 0.06 of its potential returns per unit of risk. Quantified Market Leaders is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,113 in Quantified Market Leaders on August 28, 2024 and sell it today you would earn a total of 83.00 from holding Quantified Market Leaders or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Premier vs. Quantified Market Leaders
Performance |
| Timeline |
| State Street Premier |
| Quantified Market Leaders |
State Street and Quantified Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Quantified Market
The main advantage of trading using opposite State Street and Quantified Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Quantified 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 Quantified Market will offset losses from the drop in Quantified Market's long position.| State Street vs. Locorr Longshort Modities | State Street vs. Ultra Short Term Fixed | State Street vs. Barings Active Short | State Street vs. Angel Oak Ultrashort |
| Quantified Market vs. Quantitative Longshort Equity | Quantified Market vs. Locorr Longshort Modities | Quantified Market vs. Old Westbury Short Term | Quantified Market vs. Ultra Short Term Fixed |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |