Correlation Between State Street and AdCapital
Can any of the company-specific risk be diversified away by investing in both State Street and AdCapital 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 AdCapital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street and AdCapital AG, you can compare the effects of market volatilities on State Street and AdCapital 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 AdCapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and AdCapital.
Diversification Opportunities for State Street and AdCapital
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between State and AdCapital is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding State Street and AdCapital AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdCapital AG 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 AdCapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdCapital AG has no effect on the direction of State Street i.e., State Street and AdCapital go up and down completely randomly.
Pair Corralation between State Street and AdCapital
Assuming the 90 days horizon State Street is expected to generate 1.54 times less return on investment than AdCapital. But when comparing it to its historical volatility, State Street is 2.53 times less risky than AdCapital. It trades about 0.13 of its potential returns per unit of risk. AdCapital AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 149.00 in AdCapital AG on September 3, 2024 and sell it today you would earn a total of 73.00 from holding AdCapital AG or generate 48.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street vs. AdCapital AG
Performance |
| Timeline |
| State Street |
| AdCapital AG |
State Street and AdCapital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and AdCapital
The main advantage of trading using opposite State Street and AdCapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, AdCapital 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 AdCapital will offset losses from the drop in AdCapital's long position.| State Street vs. GRUPO CARSO A1 | State Street vs. COMPUTERSHARE | State Street vs. Geely Automobile Holdings | State Street vs. Consolidated Communications Holdings |
| AdCapital vs. Blackstone Group | AdCapital vs. BlackRock | AdCapital vs. The Bank of | AdCapital vs. Ameriprise Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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