Correlation Between State Street and Aquagold International
Can any of the company-specific risk be diversified away by investing in both State Street and Aquagold International 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 Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Core and Aquagold International, you can compare the effects of market volatilities on State Street and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Aquagold International.
Diversification Opportunities for State Street and Aquagold International
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Aquagold is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding State Street Core and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Core are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of State Street i.e., State Street and Aquagold International go up and down completely randomly.
Pair Corralation between State Street and Aquagold International
Assuming the 90 days horizon State Street is expected to generate 58.53 times less return on investment than Aquagold International. But when comparing it to its historical volatility, State Street Core is 43.73 times less risky than Aquagold International. It trades about 0.04 of its potential returns per unit of risk. Aquagold International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Aquagold International on December 23, 2024 and sell it today you would lose (9.98) from holding Aquagold International or give up 99.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
State Street Core vs. Aquagold International
Performance |
| Timeline |
| State Street Core |
| Aquagold International |
State Street and Aquagold International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Aquagold International
The main advantage of trading using opposite State Street and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position.| State Street vs. Artisan Emerging Markets | State Street vs. Victory Cemp Market | State Street vs. T Rowe Price | State Street vs. Calvert Developed Market |
| Aquagold International vs. PepsiCo | Aquagold International vs. Coca Cola Consolidated | Aquagold International vs. Monster Beverage Corp | Aquagold International vs. Celsius Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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