Correlation Between State Street and COREBRIDGE FINANCIAL

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

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

Diversification Opportunities for State Street and COREBRIDGE FINANCIAL

0.46

Correlation Coefficient

State Street  COREBRIDGE FINANCIAL

Very weak diversification

The 3 months correlation between State and COREBRIDGE is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding State Street and COREBRIDGE FINANCIAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COREBRIDGE FINANCIAL INC 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 COREBRIDGE FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COREBRIDGE FINANCIAL INC has no effect on the direction of State Street i.e., State Street and COREBRIDGE FINANCIAL go up and down completely randomly.

Pair Corralation between State Street and COREBRIDGE FINANCIAL

Assuming the 90 days horizon State Street is expected to generate 0.71 times more return on investment than COREBRIDGE FINANCIAL. However, State Street is 1.41 times less risky than COREBRIDGE FINANCIAL. It trades about 0.24 of its potential returns per unit of risk. COREBRIDGE FINANCIAL INC is currently generating about 0.07 per unit of risk. If you would invest  7,872  in State Street on October 6, 2024 and sell it today you would earn a total of  1,646  from holding State Street or generate 20.91% return on investment over 90 days.

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

State Street  vs.  COREBRIDGE FINANCIAL INC

State Street

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in State Street are ranked lower than 19 (%) 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.

COREBRIDGE FINANCIAL INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COREBRIDGE FINANCIAL INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, COREBRIDGE FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with State Street and COREBRIDGE FINANCIAL

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

The idea behind State Street and COREBRIDGE FINANCIAL INC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.