Correlation Between State Street and BlackRock
Can any of the company-specific risk be diversified away by investing in both State Street and BlackRock 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 BlackRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street and BlackRock, you can compare the effects of market volatilities on State Street and BlackRock 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 BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and BlackRock.
Diversification Opportunities for State Street and BlackRock
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and BlackRock is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding State Street and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of State Street i.e., State Street and BlackRock go up and down completely randomly.
Pair Corralation between State Street and BlackRock
Assuming the 90 days trading horizon State Street is expected to generate 1.96 times more return on investment than BlackRock. However, State Street is 1.96 times more volatile than BlackRock. It trades about 0.22 of its potential returns per unit of risk. BlackRock is currently generating about 0.19 per unit of risk. If you would invest 172,800 in State Street on August 31, 2024 and sell it today you would earn a total of 23,700 from holding State Street or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street vs. BlackRock
Performance |
| Timeline |
| State Street |
| BlackRock |
State Street and BlackRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and BlackRock
The main advantage of trading using opposite State Street and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, BlackRock 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 BlackRock will offset losses from the drop in BlackRock's long position.| State Street vs. UnitedHealth Group Incorporated | State Street vs. CVS Health | State Street vs. Verizon Communications | State Street vs. DXC Technology |
| BlackRock vs. DXC Technology | BlackRock vs. Prudential Financial | BlackRock vs. CVS Health | BlackRock vs. Ross Stores |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |