Correlation Between State Street and Great West
Can any of the company-specific risk be diversified away by investing in both State Street and Great West 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 State Street and Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Target and Great West Goldman Sachs, you can compare the effects of market volatilities on State Street and Great West 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 State Street with a short position of Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Great West.
Diversification Opportunities for State Street and Great West
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between State and Great is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman and State Street 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 State Street Target are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of State Street i.e., State Street and Great West go up and down completely randomly.
Pair Corralation between State Street and Great West
Assuming the 90 days horizon State Street Target is expected to generate 0.37 times more return on investment than Great West. However, State Street Target is 2.71 times less risky than Great West. It trades about 0.01 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about -0.13 per unit of risk. If you would invest 1,496 in State Street Target on December 27, 2024 and sell it today you would earn a total of 7.00 from holding State Street Target or generate 0.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
State Street Target vs. Great West Goldman Sachs
Performance |
Timeline |
State Street Target |
Great West Goldman |
State Street and Great West Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Street and Great West
The main advantage of trading using opposite State Street and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.State Street vs. Virtus Seix Government | State Street vs. Blackrock Government Bond | State Street vs. Us Government Securities | State Street vs. Fidelity Series Government |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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