Correlation Between Elfun Diversified and State Street
Can any of the company-specific risk be diversified away by investing in both Elfun Diversified 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 Diversified 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 Diversified Fund and State Street Equity, you can compare the effects of market volatilities on Elfun Diversified 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 Diversified with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Diversified and State Street.
Diversification Opportunities for Elfun Diversified and State Street
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elfun and State is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Diversified Fund 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 Diversified 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 Diversified Fund 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 Diversified i.e., Elfun Diversified and State Street go up and down completely randomly.
Pair Corralation between Elfun Diversified and State Street
Assuming the 90 days horizon Elfun Diversified Fund is expected to generate 0.54 times more return on investment than State Street. However, Elfun Diversified Fund is 1.85 times less risky than State Street. It trades about 0.05 of its potential returns per unit of risk. State Street Equity is currently generating about -0.05 per unit of risk. If you would invest 2,026 in Elfun Diversified Fund on December 28, 2024 and sell it today you would earn a total of 30.00 from holding Elfun Diversified Fund or generate 1.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Elfun Diversified Fund vs. State Street Equity
Performance |
Timeline |
Elfun Diversified |
State Street Equity |
Elfun Diversified and State Street Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elfun Diversified and State Street
The main advantage of trading using opposite Elfun Diversified and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Diversified 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 Diversified vs. Guidemark Large Cap | Elfun Diversified vs. T Rowe Price | Elfun Diversified vs. Pace Large Value | Elfun Diversified vs. Jhancock Disciplined Value |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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