Correlation Between Nasdaq 100 and State Street
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and State Street Equity, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and State Street.
Diversification Opportunities for Nasdaq 100 and State Street
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and State is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and State Street Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Equity and Nasdaq 100 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 Nasdaq 100 Index Fund 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 Equity has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and State Street go up and down completely randomly.
Pair Corralation between Nasdaq 100 and State Street
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 1.51 times more return on investment than State Street. However, Nasdaq 100 is 1.51 times more volatile than State Street Equity. It trades about 0.16 of its potential returns per unit of risk. State Street Equity is currently generating about 0.14 per unit of risk. If you would invest 5,136 in Nasdaq 100 Index Fund on September 13, 2024 and sell it today you would earn a total of 338.00 from holding Nasdaq 100 Index Fund or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. State Street Equity
Performance |
| Timeline |
| Nasdaq 100 Index |
| State Street Equity |
Nasdaq 100 and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and State Street
The main advantage of trading using opposite Nasdaq 100 and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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.| Nasdaq 100 vs. Capital Growth Fund | Nasdaq 100 vs. Emerging Markets Fund | Nasdaq 100 vs. High Income Fund | Nasdaq 100 vs. International Fund International |
| State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Target |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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