Correlation Between State Street and QUEEN S

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

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

Diversification Opportunities for State Street and QUEEN S

0.4

Correlation Coefficient

State Street  QUEEN S

Very weak diversification

The 3 months correlation between State and QUEEN is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding State Street and QUEEN S ROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUEEN S ROAD 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 QUEEN S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUEEN S ROAD has no effect on the direction of State Street i.e., State Street and QUEEN S go up and down completely randomly.

Pair Corralation between State Street and QUEEN S

Assuming the 90 days horizon State Street is expected to generate 0.19 times more return on investment than QUEEN S. However, State Street is 5.32 times less risky than QUEEN S. It trades about -0.05 of its potential returns per unit of risk. QUEEN S ROAD is currently generating about -0.04 per unit of risk. If you would invest  9,283  in State Street on September 23, 2024 and sell it today you would lose (117.00) from holding State Street or give up 1.26% of portfolio value over 90 days.

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

State Street  vs.  QUEEN S ROAD

State Street

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in State Street are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, State Street reported solid returns over the last few months and may actually be approaching a breakup point.

QUEEN S ROAD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QUEEN S ROAD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, QUEEN S is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with State Street and QUEEN S

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

The idea behind State Street and QUEEN S ROAD 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.