Correlation Between State Street and Elfun Diversified
Can any of the company-specific risk be diversified away by investing in both State Street and Elfun Diversified 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 Elfun Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Equity and Elfun Diversified Fund, you can compare the effects of market volatilities on State Street and Elfun Diversified 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 Elfun Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Elfun Diversified.
Diversification Opportunities for State Street and Elfun Diversified
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Elfun is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding State Street Equity and Elfun Diversified Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Diversified 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 Equity are associated (or correlated) with Elfun Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Diversified has no effect on the direction of State Street i.e., State Street and Elfun Diversified go up and down completely randomly.
Pair Corralation between State Street and Elfun Diversified
Assuming the 90 days horizon State Street Equity is expected to generate 1.79 times more return on investment than Elfun Diversified. However, State Street is 1.79 times more volatile than Elfun Diversified Fund. It trades about 0.37 of its potential returns per unit of risk. Elfun Diversified Fund is currently generating about 0.28 per unit of risk. If you would invest 52,469 in State Street Equity on September 3, 2024 and sell it today you would earn a total of 3,001 from holding State Street Equity or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Equity vs. Elfun Diversified Fund
Performance |
| Timeline |
| State Street Equity |
| Elfun Diversified |
State Street and Elfun Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Elfun Diversified
The main advantage of trading using opposite State Street and Elfun Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Elfun Diversified 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 Elfun Diversified will offset losses from the drop in Elfun Diversified's long position.| State Street vs. Simt Real Estate | State Street vs. Vanguard Reit Index | State Street vs. Columbia Real Estate | State Street vs. Amg Managers Centersquare |
| Elfun Diversified vs. Morningstar Aggressive Growth | Elfun Diversified vs. Artisan High Income | Elfun Diversified vs. Metropolitan West High | Elfun Diversified vs. Ab Global Risk |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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