Correlation Between State Street and Ab Impact
Can any of the company-specific risk be diversified away by investing in both State Street and Ab Impact 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 Impact 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 Ab Impact Municipal, you can compare the effects of market volatilities on State Street and Ab Impact 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 Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Ab Impact.
Diversification Opportunities for State Street and Ab Impact
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between State and ABIMX is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding State Street Equity and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal 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 Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of State Street i.e., State Street and Ab Impact go up and down completely randomly.
Pair Corralation between State Street and Ab Impact
Assuming the 90 days horizon State Street Equity is expected to generate 2.18 times more return on investment than Ab Impact. However, State Street is 2.18 times more volatile than Ab Impact Municipal. It trades about 0.19 of its potential returns per unit of risk. Ab Impact Municipal is currently generating about 0.02 per unit of risk. If you would invest 42,195 in State Street Equity on September 12, 2024 and sell it today you would earn a total of 3,441 from holding State Street Equity or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Equity vs. Ab Impact Municipal
Performance |
| Timeline |
| State Street Equity |
| Ab Impact Municipal |
State Street and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Ab Impact
The main advantage of trading using opposite State Street and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Ab Impact 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 Impact will offset losses from the drop in Ab Impact's long position.| State Street vs. Nasdaq 100 Index Fund | State Street vs. Volumetric Fund Volumetric | State Street vs. Omni Small Cap Value | State Street vs. Ab Small Cap |
| Ab Impact vs. SCOR PK | Ab Impact vs. Morningstar Unconstrained Allocation | Ab Impact vs. Thrivent High Yield | Ab Impact vs. Via Renewables |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |