Correlation Between Aquagold International and State Street

Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and State Street Smallmid, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and State Street.

Diversification Opportunities for Aquagold International and State Street

0.27

Correlation Coefficient

Aquagold International  State Street

Modest diversification

The 3 months correlation between Aquagold and State is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and State Street Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Smallmid and Aquagold International 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 Aquagold International 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 Smallmid has no effect on the direction of Aquagold International i.e., Aquagold International and State Street go up and down completely randomly.

Pair Corralation between Aquagold International and State Street

Given the investment horizon of 90 days Aquagold International is expected to under-perform the State Street. In addition to that, Aquagold International is 4.93 times more volatile than State Street Smallmid. It trades about -0.13 of its total potential returns per unit of risk. State Street Smallmid is currently generating about -0.09 per unit of volatility. If you would invest  30,550  in State Street Smallmid on December 22, 2024 and sell it today you would lose (2,152) from holding State Street Smallmid or give up 7.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Aquagold International  vs.  State Street Smallmid

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

State Street Smallmid

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Street Smallmid has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aquagold International and State Street

The main advantage of trading using opposite Aquagold International and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.

The idea behind Aquagold International and State Street Smallmid pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.