Correlation Between State Street and The Gold
Can any of the company-specific risk be diversified away by investing in both State Street and The Gold 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 The Gold 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 The Gold Bullion, you can compare the effects of market volatilities on State Street and The Gold 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 The Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and The Gold.
Diversification Opportunities for State Street and The Gold
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and The is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion 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 The Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of State Street i.e., State Street and The Gold go up and down completely randomly.
Pair Corralation between State Street and The Gold
Assuming the 90 days horizon State Street Target is expected to generate 0.39 times more return on investment than The Gold. However, State Street Target is 2.54 times less risky than The Gold. It trades about 0.3 of its potential returns per unit of risk. The Gold Bullion is currently generating about -0.1 per unit of risk. If you would invest 1,548 in State Street Target on September 3, 2024 and sell it today you would earn a total of 51.00 from holding State Street Target or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Target vs. The Gold Bullion
Performance |
| Timeline |
| State Street Target |
| Gold Bullion |
State Street and The Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and The Gold
The main advantage of trading using opposite State Street and The Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, The Gold 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 The Gold will offset losses from the drop in The Gold's long position.| State Street vs. T Rowe Price | State Street vs. T Rowe Price | State Street vs. T Rowe Price | State Street vs. T Rowe Price |
| The Gold vs. Quantified Market Leaders | The Gold vs. Quantified Managed Income | The Gold vs. Quantified Alternative Investment | The Gold vs. Quantified Stf 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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