Correlation Between Lendingtree and State Street
Can any of the company-specific risk be diversified away by investing in both Lendingtree and State Street 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 Lendingtree and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendingtree and State Street, you can compare the effects of market volatilities on Lendingtree and State Street 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 Lendingtree with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendingtree and State Street.
Diversification Opportunities for Lendingtree and State Street
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lendingtree and State is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lendingtree and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street and Lendingtree 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 Lendingtree are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of Lendingtree i.e., Lendingtree and State Street go up and down completely randomly.
Pair Corralation between Lendingtree and State Street
Given the investment horizon of 90 days Lendingtree is expected to generate 9.91 times less return on investment than State Street. In addition to that, Lendingtree is 8.37 times more volatile than State Street. It trades about 0.0 of its total potential returns per unit of risk. State Street is currently generating about 0.09 per unit of volatility. If you would invest 2,350 in State Street on September 3, 2024 and sell it today you would earn a total of 157.00 from holding State Street or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendingtree vs. State Street
Performance |
| Timeline |
| Lendingtree |
| State Street |
Lendingtree and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendingtree and State Street
The main advantage of trading using opposite Lendingtree and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendingtree position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Lendingtree vs. Voya Financial | Lendingtree vs. B Riley Financial | Lendingtree vs. Voya Financial | Lendingtree vs. B Riley Financial |
| State Street vs. The Gabelli Equity | State Street vs. The Gabelli Multimedia | State Street vs. The Gabelli Equity | State Street vs. Virtus AllianzGI Convertible |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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