Correlation Between Mid Cap and State Street

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

By analyzing existing cross correlation between Mid Cap Growth and State Street Master, you can compare the effects of market volatilities on Mid Cap and State Street 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 Mid Cap with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and State Street.

Diversification Opportunities for Mid Cap and State Street

0.0

Correlation Coefficient

Mid Cap  State Street

Pay attention - limited upside

The 3 months correlation between Mid and State is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and State Street Master in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Master and Mid Cap 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 Mid Cap Growth are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Master has no effect on the direction of Mid Cap i.e., Mid Cap and State Street go up and down completely randomly.

Pair Corralation between Mid Cap and State Street

If you would invest  100.00  in State Street Master on October 11, 2024 and sell it today you would earn a total of  0.00  from holding State Street Master or generate 0.0% return on investment over 90 days.

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

Mid Cap Growth  vs.  State Street Master

Mid Cap Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

State Street Master

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Street Master has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and State Street

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

The idea behind Mid Cap Growth and State Street Master 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.