Correlation Between State Street and Teton Westwood
Can any of the company-specific risk be diversified away by investing in both State Street and Teton Westwood 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 Westwood 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 Westwood Equity, you can compare the effects of market volatilities on State Street and Teton Westwood 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 Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Teton Westwood.
Diversification Opportunities for State Street and Teton Westwood
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Teton is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding State Street Institutional and Teton Westwood Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Equity 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 Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Equity has no effect on the direction of State Street i.e., State Street and Teton Westwood go up and down completely randomly.
Pair Corralation between State Street and Teton Westwood
Assuming the 90 days horizon State Street Institutional is expected to generate 0.58 times more return on investment than Teton Westwood. However, State Street Institutional is 1.73 times less risky than Teton Westwood. It trades about 0.15 of its potential returns per unit of risk. Teton Westwood Equity is currently generating about -0.08 per unit of risk. If you would invest 1,361 in State Street Institutional on September 15, 2024 and sell it today you would earn a total of 87.00 from holding State Street Institutional or generate 6.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
State Street Institutional vs. Teton Westwood Equity
Performance |
Timeline |
State Street Institu |
Teton Westwood Equity |
State Street and Teton Westwood Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Street and Teton Westwood
The main advantage of trading using opposite State Street and Teton Westwood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Teton Westwood 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 Westwood will offset losses from the drop in Teton Westwood's long position.State Street vs. Artisan Global Unconstrained | State Street vs. Qs Global Equity | State Street vs. Commonwealth Global Fund | State Street vs. Scharf Global Opportunity |
Teton Westwood vs. Teton Westwood Balanced | Teton Westwood vs. Teton Westwood Small | Teton Westwood vs. The Gabelli Asset | Teton Westwood vs. Teton Westwood Mighty |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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