Correlation Between State Street and Ab High
Can any of the company-specific risk be diversified away by investing in both State Street and Ab High 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 Ab High 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 Ab High Income, you can compare the effects of market volatilities on State Street and Ab High 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 Ab High. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Ab High.
Diversification Opportunities for State Street and Ab High
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and AGDAX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Ab High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab High Income 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 Ab High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab High Income has no effect on the direction of State Street i.e., State Street and Ab High go up and down completely randomly.
Pair Corralation between State Street and Ab High
Assuming the 90 days horizon State Street Target is expected to generate 2.41 times more return on investment than Ab High. However, State Street is 2.41 times more volatile than Ab High Income. It trades about 0.09 of its potential returns per unit of risk. Ab High Income is currently generating about 0.14 per unit of risk. If you would invest 1,253 in State Street Target on August 26, 2024 and sell it today you would earn a total of 420.00 from holding State Street Target or generate 33.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Target vs. Ab High Income
Performance |
| Timeline |
| State Street Target |
| Ab High Income |
State Street and Ab High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Ab High
The main advantage of trading using opposite State Street and Ab High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Ab High 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 Ab High will offset losses from the drop in Ab High's long position.| State Street vs. Ab High Income | State Street vs. Lgm Risk Managed | State Street vs. T Rowe Price | State Street vs. Pace High Yield |
| Ab High vs. Short Precious Metals | Ab High vs. Fidelity Advisor Gold | Ab High vs. Oppenheimer Gold Special | Ab High vs. Invesco Gold Special |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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