Correlation Between Elfun International and State Street
Can any of the company-specific risk be diversified away by investing in both Elfun 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 Elfun 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 Elfun International Equity and State Street Equity, you can compare the effects of market volatilities on Elfun 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 Elfun International with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun International and State Street.
Diversification Opportunities for Elfun International and State Street
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elfun and State is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Elfun International Equity 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 Elfun 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 Elfun International Equity 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 Elfun International i.e., Elfun International and State Street go up and down completely randomly.
Pair Corralation between Elfun International and State Street
Assuming the 90 days horizon Elfun International is expected to generate 2.1 times less return on investment than State Street. In addition to that, Elfun International is 1.04 times more volatile than State Street Equity. It trades about 0.07 of its total potential returns per unit of risk. State Street Equity is currently generating about 0.14 per unit of volatility. If you would invest 33,944 in State Street Equity on September 14, 2024 and sell it today you would earn a total of 11,594 from holding State Street Equity or generate 34.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Elfun International Equity vs. State Street Equity
Performance |
Timeline |
Elfun International |
State Street Equity |
Elfun International and State Street Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elfun International and State Street
The main advantage of trading using opposite Elfun International and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun 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.Elfun International vs. State Street Target | Elfun International vs. State Street Target | Elfun International vs. Ssga International Stock | Elfun International vs. State Street Target |
State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Target |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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