Correlation Between Blackrock and State Street
Can any of the company-specific risk be diversified away by investing in both Blackrock 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 Blackrock and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Sp 500 and State Street Equity, you can compare the effects of market volatilities on Blackrock 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 Blackrock with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and State Street.
Diversification Opportunities for Blackrock and State Street
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Blackrock and State is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sp 500 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 Blackrock 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 Blackrock Sp 500 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 Blackrock i.e., Blackrock and State Street go up and down completely randomly.
Pair Corralation between Blackrock and State Street
Assuming the 90 days horizon Blackrock is expected to generate 1.01 times less return on investment than State Street. But when comparing it to its historical volatility, Blackrock Sp 500 is 1.03 times less risky than State Street. It trades about 0.13 of its potential returns per unit of risk. State Street Equity is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 31,831 in State Street Equity on August 31, 2024 and sell it today you would earn a total of 13,586 from holding State Street Equity or generate 42.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Sp 500 vs. State Street Equity
Performance |
| Timeline |
| Blackrock Sp 500 |
| State Street Equity |
Blackrock and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock and State Street
The main advantage of trading using opposite Blackrock and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock 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.| Blackrock vs. Victory Rs Small | Blackrock vs. Ab Small Cap | Blackrock vs. Growth Opportunities Fund | Blackrock vs. T Rowe Price |
| State Street vs. Ab All Market | State Street vs. Ep Emerging Markets | State Street vs. Origin Emerging Markets | State Street vs. Aqr Long Short Equity |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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