Correlation Between State Street and Short Term
Can any of the company-specific risk be diversified away by investing in both State Street and Short Term 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 Short Term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Target and Short Term Government Fund, you can compare the effects of market volatilities on State Street and Short Term 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 Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Short Term.
Diversification Opportunities for State Street and Short Term
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Short is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Target are associated (or correlated) with Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of State Street i.e., State Street and Short Term go up and down completely randomly.
Pair Corralation between State Street and Short Term
Assuming the 90 days horizon State Street Target is expected to under-perform the Short Term. In addition to that, State Street is 9.99 times more volatile than Short Term Government Fund. It trades about -0.08 of its total potential returns per unit of risk. Short Term Government Fund is currently generating about 0.24 per unit of volatility. If you would invest 902.00 in Short Term Government Fund on October 24, 2024 and sell it today you would earn a total of 4.00 from holding Short Term Government Fund or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Target vs. Short Term Government Fund
Performance |
| Timeline |
| State Street Target |
| Short Term Government |
State Street and Short Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Short Term
The main advantage of trading using opposite State Street and Short Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Short Term 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 Short Term will offset losses from the drop in Short Term's long position.| State Street vs. Short Term Government Fund | State Street vs. Lord Abbett Government | State Street vs. Dws Government Money | State Street vs. Franklin Adjustable Government |
| Short Term vs. Issachar Fund Class | Short Term vs. Semiconductor Ultrasector Profund | Short Term vs. Qs Large Cap | Short Term vs. Tax Managed Mid Small |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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