Correlation Between State Street and Platinum Investment
Can any of the company-specific risk be diversified away by investing in both State Street and Platinum Investment 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 Platinum Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street and Platinum Investment Management, you can compare the effects of market volatilities on State Street and Platinum Investment 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 Platinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Platinum Investment.
Diversification Opportunities for State Street and Platinum Investment
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between State and Platinum is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding State Street and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of State Street i.e., State Street and Platinum Investment go up and down completely randomly.
Pair Corralation between State Street and Platinum Investment
Assuming the 90 days horizon State Street is expected to generate 0.3 times more return on investment than Platinum Investment. However, State Street is 3.32 times less risky than Platinum Investment. It trades about -0.46 of its potential returns per unit of risk. Platinum Investment Management is currently generating about -0.17 per unit of risk. If you would invest 9,627 in State Street on December 11, 2024 and sell it today you would lose (1,401) from holding State Street or give up 14.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street vs. Platinum Investment Management
Performance |
| Timeline |
| State Street |
| Platinum Investment |
State Street and Platinum Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Platinum Investment
The main advantage of trading using opposite State Street and Platinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Platinum Investment 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 Platinum Investment will offset losses from the drop in Platinum Investment's long position.| State Street vs. Scientific Games | State Street vs. MOLSON RS BEVERAGE | State Street vs. Thai Beverage Public | State Street vs. FUTURE GAMING GRP |
| Platinum Investment vs. GUILD ESPORTS PLC | Platinum Investment vs. Xinhua Winshare Publishing | Platinum Investment vs. ARISTOCRAT LEISURE | Platinum Investment vs. Laureate Education |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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