Correlation Between State Street and Bruce Fund

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

By analyzing existing cross correlation between State Street Smallmid and Bruce Fund Bruce, you can compare the effects of market volatilities on State Street and Bruce Fund 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 Bruce Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Bruce Fund.

Diversification Opportunities for State Street and Bruce Fund

-0.19

Correlation Coefficient

State Street  Bruce Fund

Good diversification

The 3 months correlation between State and Bruce is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding State Street Smallmid and Bruce Fund Bruce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bruce Fund Bruce 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 Smallmid are associated (or correlated) with Bruce Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bruce Fund Bruce has no effect on the direction of State Street i.e., State Street and Bruce Fund go up and down completely randomly.

Pair Corralation between State Street and Bruce Fund

Assuming the 90 days horizon State Street Smallmid is expected to generate 0.79 times more return on investment than Bruce Fund. However, State Street Smallmid is 1.27 times less risky than Bruce Fund. It trades about -0.2 of its potential returns per unit of risk. Bruce Fund Bruce is currently generating about -0.22 per unit of risk. If you would invest  33,193  in State Street Smallmid on September 27, 2024 and sell it today you would lose (1,743) from holding State Street Smallmid or give up 5.25% of portfolio value over 90 days.

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

State Street Smallmid  vs.  Bruce Fund Bruce

State Street Smallmid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Smallmid are ranked lower than 7 (%) 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 January 2025.

Bruce Fund Bruce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bruce Fund Bruce has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with State Street and Bruce Fund

The main advantage of trading using opposite State Street and Bruce Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Bruce Fund 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 Bruce Fund will offset losses from the drop in Bruce Fund's long position.

The idea behind State Street Smallmid and Bruce Fund Bruce 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.