Correlation Between State Street and Prudential Real
Can any of the company-specific risk be diversified away by investing in both State Street and Prudential 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 Prudential 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 Prudential Real Estate, you can compare the effects of market volatilities on State Street and Prudential 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 Prudential Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Prudential Real.
Diversification Opportunities for State Street and Prudential Real
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between State and Prudential is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Prudential Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential 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 Prudential Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Real Estate has no effect on the direction of State Street i.e., State Street and Prudential Real go up and down completely randomly.
Pair Corralation between State Street and Prudential Real
Assuming the 90 days horizon State Street Target is expected to generate 0.84 times more return on investment than Prudential Real. However, State Street Target is 1.2 times less risky than Prudential Real. It trades about 0.18 of its potential returns per unit of risk. Prudential Real Estate is currently generating about -0.01 per unit of risk. If you would invest 1,608 in State Street Target on September 13, 2024 and sell it today you would earn a total of 28.00 from holding State Street Target or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
State Street Target vs. Prudential Real Estate
Performance |
| Timeline |
| State Street Target |
| Prudential Real Estate |
State Street and Prudential Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Prudential Real
The main advantage of trading using opposite State Street and Prudential Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Prudential 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 Prudential Real will offset losses from the drop in Prudential 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 |
| Prudential Real vs. Artisan Emerging Markets | Prudential Real vs. Investec Emerging Markets | Prudential Real vs. Mid Cap 15x Strategy | Prudential Real vs. Vy Jpmorgan Emerging |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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