Correlation Between State Street and Acrex
Can any of the company-specific risk be diversified away by investing in both State Street and Acrex 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 Acrex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Smallmid and Acrex, you can compare the effects of market volatilities on State Street and Acrex 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 Acrex. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Acrex.
Diversification Opportunities for State Street and Acrex
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and Acrex is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding State Street Smallmid and Acrex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrex 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 Smallmid are associated (or correlated) with Acrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrex has no effect on the direction of State Street i.e., State Street and Acrex go up and down completely randomly.
Pair Corralation between State Street and Acrex
Assuming the 90 days horizon State Street Smallmid is expected to generate 1.14 times more return on investment than Acrex. However, State Street is 1.14 times more volatile than Acrex. It trades about 0.07 of its potential returns per unit of risk. Acrex is currently generating about -0.05 per unit of risk. If you would invest 21,457 in State Street Smallmid on September 28, 2024 and sell it today you would earn a total of 9,098 from holding State Street Smallmid or generate 42.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 38.31% |
| Values | Daily Returns |
State Street Smallmid vs. Acrex
Performance |
| Timeline |
| State Street Smallmid |
| Acrex |
State Street and Acrex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Acrex
The main advantage of trading using opposite State Street and Acrex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Acrex 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 Acrex will offset losses from the drop in Acrex'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 |
| Acrex vs. Lord Abbett Small | Acrex vs. Fidelity Small Cap | Acrex vs. Applied Finance Explorer | Acrex vs. Heartland Value Plus |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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