Correlation Between State Street and Hancock Whitney
Can any of the company-specific risk be diversified away by investing in both State Street and Hancock Whitney 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 Hancock Whitney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street and Hancock Whitney, you can compare the effects of market volatilities on State Street and Hancock Whitney 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 Hancock Whitney. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Hancock Whitney.
Diversification Opportunities for State Street and Hancock Whitney
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Hancock is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding State Street and Hancock Whitney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hancock Whitney 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 are associated (or correlated) with Hancock Whitney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hancock Whitney has no effect on the direction of State Street i.e., State Street and Hancock Whitney go up and down completely randomly.
Pair Corralation between State Street and Hancock Whitney
Assuming the 90 days trading horizon State Street is expected to generate 1.84 times less return on investment than Hancock Whitney. But when comparing it to its historical volatility, State Street is 1.55 times less risky than Hancock Whitney. It trades about 0.03 of its potential returns per unit of risk. Hancock Whitney is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,002 in Hancock Whitney on September 24, 2024 and sell it today you would earn a total of 422.00 from holding Hancock Whitney or generate 21.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
State Street vs. Hancock Whitney
Performance |
Timeline |
State Street |
Hancock Whitney |
State Street and Hancock Whitney Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Street and Hancock Whitney
The main advantage of trading using opposite State Street and Hancock Whitney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Hancock Whitney 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 Hancock Whitney will offset losses from the drop in Hancock Whitney's long position.State Street vs. Fifth Third Bancorp | State Street vs. First Citizens BancShares | State Street vs. Arch Capital Group | State Street vs. Merchants Bancorp |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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