Correlation Between Rational Dividend and State Street

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

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

Diversification Opportunities for Rational Dividend and State Street

0.02

Correlation Coefficient

Rational Dividend  State Street

Significant diversification

The 3 months correlation between Rational and State is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rational Dividend Capture and State Street Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Global and Rational Dividend 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 Rational Dividend Capture 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 Global has no effect on the direction of Rational Dividend i.e., Rational Dividend and State Street go up and down completely randomly.

Pair Corralation between Rational Dividend and State Street

Assuming the 90 days horizon Rational Dividend Capture is expected to under-perform the State Street. But the mutual fund apears to be less risky and, when comparing its historical volatility, Rational Dividend Capture is 1.21 times less risky than State Street. The mutual fund trades about -0.07 of its potential returns per unit of risk. The State Street Global is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  10,338  in State Street Global on December 21, 2024 and sell it today you would earn a total of  700.00  from holding State Street Global or generate 6.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rational Dividend Capture  vs.  State Street Global

Rational Dividend Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Dividend Capture has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rational Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

State Street Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Global are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, State Street may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rational Dividend and State Street

The main advantage of trading using opposite Rational Dividend and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Dividend 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 Rational Dividend Capture and State Street Global 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.