Correlation Between Vy Baron and State Street

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

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

Diversification Opportunities for Vy Baron and State Street

0.32

Correlation Coefficient

Vy Baron  State Street

Weak diversification

The 3 months correlation between IBSAX and State is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vy Baron Growth and State Street Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Premier and Vy Baron 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 Vy Baron Growth 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 Premier has no effect on the direction of Vy Baron i.e., Vy Baron and State Street go up and down completely randomly.

Pair Corralation between Vy Baron and State Street

Assuming the 90 days horizon Vy Baron is expected to generate 2.1 times less return on investment than State Street. But when comparing it to its historical volatility, Vy Baron Growth is 1.14 times less risky than State Street. It trades about 0.04 of its potential returns per unit of risk. State Street Premier is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  13,559  in State Street Premier on September 29, 2024 and sell it today you would earn a total of  1,360  from holding State Street Premier or generate 10.03% return on investment over 90 days.

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

Vy Baron Growth  vs.  State Street Premier

Vy Baron Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

State Street Premier

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Premier are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, State Street may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vy Baron and State Street

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

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.