Correlation Between State Street and Elfun Diversified
Can any of the company-specific risk be diversified away by investing in both State Street and Elfun Diversified 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 Elfun Diversified 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 Elfun Diversified Fund, you can compare the effects of market volatilities on State Street and Elfun Diversified 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 Elfun Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Elfun Diversified.
Diversification Opportunities for State Street and Elfun Diversified
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Elfun is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding State Street Core and Elfun Diversified Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Diversified 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 Elfun Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Diversified has no effect on the direction of State Street i.e., State Street and Elfun Diversified go up and down completely randomly.
Pair Corralation between State Street and Elfun Diversified
Assuming the 90 days horizon State Street Core is expected to generate 1.79 times more return on investment than Elfun Diversified. However, State Street is 1.79 times more volatile than Elfun Diversified Fund. It trades about 0.32 of its potential returns per unit of risk. Elfun Diversified Fund is currently generating about 0.3 per unit of risk. If you would invest 8,370 in State Street Core on September 1, 2024 and sell it today you would earn a total of 426.00 from holding State Street Core or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Core vs. Elfun Diversified Fund
Performance |
| Timeline |
| State Street Core |
| Elfun Diversified |
State Street and Elfun Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Elfun Diversified
The main advantage of trading using opposite State Street and Elfun Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Elfun Diversified 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 Elfun Diversified will offset losses from the drop in Elfun Diversified's long position.| State Street vs. Goldman Sachs Real | State Street vs. Virtus Real Estate | State Street vs. Forum Real Estate | State Street vs. Columbia Real Estate |
| Elfun Diversified vs. Shelton Emerging Markets | Elfun Diversified vs. Doubleline Emerging Markets | Elfun Diversified vs. Growth Strategy Fund | Elfun Diversified vs. Eagle Mlp Strategy |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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