Correlation Between MTI Wireless and State Street

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

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

Diversification Opportunities for MTI Wireless and State Street

-0.54

Correlation Coefficient

MTI Wireless  State Street

Excellent diversification

The 3 months correlation between MTI and State is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MTI Wireless Edge and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp and MTI Wireless 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 MTI Wireless Edge 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 Corp has no effect on the direction of MTI Wireless i.e., MTI Wireless and State Street go up and down completely randomly.

Pair Corralation between MTI Wireless and State Street

Assuming the 90 days trading horizon MTI Wireless Edge is expected to under-perform the State Street. In addition to that, MTI Wireless is 1.62 times more volatile than State Street Corp. It trades about -0.05 of its total potential returns per unit of risk. State Street Corp is currently generating about 0.23 per unit of volatility. If you would invest  8,477  in State Street Corp on September 14, 2024 and sell it today you would earn a total of  1,570  from holding State Street Corp or generate 18.52% return on investment over 90 days.

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

MTI Wireless Edge  vs.  State Street Corp

MTI Wireless Edge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTI Wireless Edge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MTI Wireless is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

State Street Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, State Street unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTI Wireless and State Street

The main advantage of trading using opposite MTI Wireless and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI Wireless 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 MTI Wireless Edge and State Street Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.