Correlation Between State Street and Short Real
Can any of the company-specific risk be diversified away by investing in both State Street and Short Real 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 Real 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 Real Estate, you can compare the effects of market volatilities on State Street and Short Real 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 Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Short Real.
Diversification Opportunities for State Street and Short Real
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between State and Short is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Short Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Real Estate 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 Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Real Estate has no effect on the direction of State Street i.e., State Street and Short Real go up and down completely randomly.
Pair Corralation between State Street and Short Real
Assuming the 90 days horizon State Street is expected to generate 1.94 times less return on investment than Short Real. But when comparing it to its historical volatility, State Street Target is 1.99 times less risky than Short Real. It trades about 0.06 of its potential returns per unit of risk. Short Real Estate is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 790.00 in Short Real Estate on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Short Real Estate or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
State Street Target vs. Short Real Estate
Performance |
| Timeline |
| State Street Target |
| Short Real Estate |
State Street and Short Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Short Real
The main advantage of trading using opposite State Street and Short Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Short Real 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 Real will offset losses from the drop in Short Real's long position.| State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Target |
| Short Real vs. Short Real Estate | Short Real vs. Ultrashort Mid Cap Profund | Short Real vs. Ultrashort Mid Cap Profund | Short Real vs. Technology Ultrasector Profund |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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