Correlation Between State Street and Teton Vertible

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

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

Diversification Opportunities for State Street and Teton Vertible

0.92

Correlation Coefficient

State Street  Teton Vertible

Almost no diversification

The 3 months correlation between State and Teton is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding State Street Institutional and Teton Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Vertible Securities 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 Institutional are associated (or correlated) with Teton Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Vertible Securities has no effect on the direction of State Street i.e., State Street and Teton Vertible go up and down completely randomly.

Pair Corralation between State Street and Teton Vertible

Assuming the 90 days horizon State Street is expected to generate 1.53 times less return on investment than Teton Vertible. In addition to that, State Street is 1.25 times more volatile than Teton Vertible Securities. It trades about 0.15 of its total potential returns per unit of risk. Teton Vertible Securities is currently generating about 0.28 per unit of volatility. If you would invest  1,203  in Teton Vertible Securities on September 14, 2024 and sell it today you would earn a total of  123.00  from holding Teton Vertible Securities or generate 10.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

State Street Institutional  vs.  Teton Vertible Securities

State Street Institu

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Institutional are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, State Street may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Teton Vertible Securities

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Teton Vertible Securities are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Teton Vertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with State Street and Teton Vertible

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

The idea behind State Street Institutional and Teton Vertible Securities 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..