Correlation Between Investec Emerging and State Street
Can any of the company-specific risk be diversified away by investing in both Investec Emerging 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 Investec Emerging and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and State Street Core, you can compare the effects of market volatilities on Investec Emerging 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 Investec Emerging with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and State Street.
Diversification Opportunities for Investec Emerging and State Street
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investec and State is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and State Street Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Core and Investec Emerging 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 Investec Emerging Markets 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 Core has no effect on the direction of Investec Emerging i.e., Investec Emerging and State Street go up and down completely randomly.
Pair Corralation between Investec Emerging and State Street
Assuming the 90 days horizon Investec Emerging Markets is expected to under-perform the State Street. But the mutual fund apears to be less risky and, when comparing its historical volatility, Investec Emerging Markets is 1.03 times less risky than State Street. The mutual fund trades about -0.18 of its potential returns per unit of risk. The State Street Core is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 8,549 in State Street Core on August 29, 2024 and sell it today you would earn a total of 231.00 from holding State Street Core or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Investec Emerging Markets vs. State Street Core
Performance |
| Timeline |
| Investec Emerging Markets |
| State Street Core |
Investec Emerging and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and State Street
The main advantage of trading using opposite Investec Emerging and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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.| Investec Emerging vs. Ab High Income | Investec Emerging vs. Vanguard High Yield Tax Exempt | Investec Emerging vs. Victory High Income | Investec Emerging vs. Calvert High Yield |
| State Street vs. Jhancock Diversified Macro | State Street vs. Massmutual Premier Diversified | State Street vs. Vanguard Strategic Small Cap | State Street vs. T Rowe Price |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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