Correlation Between State Street and Locorr Longshort
Can any of the company-specific risk be diversified away by investing in both State Street and Locorr Longshort 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 Locorr Longshort 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 Locorr Longshort Modities, you can compare the effects of market volatilities on State Street and Locorr Longshort 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 Locorr Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Locorr Longshort.
Diversification Opportunities for State Street and Locorr Longshort
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between State and Locorr is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Locorr Longshort Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Longshort Modities 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 Locorr Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Longshort Modities has no effect on the direction of State Street i.e., State Street and Locorr Longshort go up and down completely randomly.
Pair Corralation between State Street and Locorr Longshort
Assuming the 90 days horizon State Street Target is expected to generate 1.02 times more return on investment than Locorr Longshort. However, State Street is 1.02 times more volatile than Locorr Longshort Modities. It trades about 0.31 of its potential returns per unit of risk. Locorr Longshort Modities is currently generating about -0.09 per unit of risk. If you would invest 1,138 in State Street Target on September 4, 2024 and sell it today you would earn a total of 20.00 from holding State Street Target or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
State Street Target vs. Locorr Longshort Modities
Performance |
| Timeline |
| State Street Target |
| Locorr Longshort Modities |
State Street and Locorr Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Locorr Longshort
The main advantage of trading using opposite State Street and Locorr Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Locorr Longshort 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 Locorr Longshort will offset losses from the drop in Locorr Longshort's long position.| State Street vs. Locorr Longshort Modities | State Street vs. Federated Short Term Income | State Street vs. Limited Term Tax | State Street vs. Quantitative Longshort Equity |
| Locorr Longshort vs. Lind Capital Partners | Locorr Longshort vs. Artisan High Income | Locorr Longshort vs. Bbh Intermediate Municipal | Locorr Longshort vs. California Bond 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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