Correlation Between State Street and Gabelli Global
Can any of the company-specific risk be diversified away by investing in both State Street and Gabelli Global 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 Gabelli Global 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 Gabelli Global Financial, you can compare the effects of market volatilities on State Street and Gabelli Global 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 Gabelli Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Gabelli Global.
Diversification Opportunities for State Street and Gabelli Global
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Gabelli is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target and Gabelli Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Global Financial 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 Gabelli Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Global Financial has no effect on the direction of State Street i.e., State Street and Gabelli Global go up and down completely randomly.
Pair Corralation between State Street and Gabelli Global
Assuming the 90 days horizon State Street Target is expected to under-perform the Gabelli Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, State Street Target is 1.89 times less risky than Gabelli Global. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Gabelli Global Financial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,624 in Gabelli Global Financial on December 4, 2024 and sell it today you would earn a total of 61.00 from holding Gabelli Global Financial or generate 3.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
State Street Target vs. Gabelli Global Financial
Performance |
Timeline |
State Street Target |
Gabelli Global Financial |
State Street and Gabelli Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Street and Gabelli Global
The main advantage of trading using opposite State Street and Gabelli Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Gabelli Global 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 Gabelli Global will offset losses from the drop in Gabelli Global's long position.State Street vs. State Street Institutional | State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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