Correlation Between State Street and Federated Clover
Can any of the company-specific risk be diversified away by investing in both State Street and Federated Clover 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 Federated Clover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Real and Federated Clover Small, you can compare the effects of market volatilities on State Street and Federated Clover 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 Federated Clover. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Federated Clover.
Diversification Opportunities for State Street and Federated Clover
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Federated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding State Street Real and Federated Clover Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Clover Small 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 Real are associated (or correlated) with Federated Clover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Clover Small has no effect on the direction of State Street i.e., State Street and Federated Clover go up and down completely randomly.
Pair Corralation between State Street and Federated Clover
Assuming the 90 days horizon State Street Real is expected to generate 0.67 times more return on investment than Federated Clover. However, State Street Real is 1.49 times less risky than Federated Clover. It trades about 0.05 of its potential returns per unit of risk. Federated Clover Small is currently generating about 0.01 per unit of risk. If you would invest 1,001 in State Street Real on November 3, 2024 and sell it today you would earn a total of 62.00 from holding State Street Real or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Real vs. Federated Clover Small
Performance |
| Timeline |
| State Street Real |
| Federated Clover Small |
State Street and Federated Clover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Federated Clover
The main advantage of trading using opposite State Street and Federated Clover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Federated Clover 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 Federated Clover will offset losses from the drop in Federated Clover's long position.| State Street vs. Pace Municipal Fixed | State Street vs. Old Westbury California | State Street vs. Morningstar Municipal Bond | State Street vs. Lind Capital Partners |
| Federated Clover vs. Chartwell Short Duration | Federated Clover vs. Transamerica High Yield | Federated Clover vs. Us High Relative | Federated Clover vs. Lgm Risk Managed |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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