Correlation Between State Street and Star Equity

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Can any of the company-specific risk be diversified away by investing in both State Street and Star Equity 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 Star Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and Star Equity Holdings, you can compare the effects of market volatilities on State Street and Star Equity 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 Star Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Star Equity.

Diversification Opportunities for State Street and Star Equity

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between State Street and Star Equity

If you would invest  7,348  in State Street Corp on December 29, 2023 and sell it today you would earn a total of  371.00  from holding State Street Corp or generate 5.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

State Street Corp  vs.  Star Equity Holdings

 Performance 
       Timeline  
State Street Corp 

Risk-Adjusted Performance

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Over the last 90 days State Street Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Street is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Star Equity Holdings 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Star Equity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Star Equity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

State Street and Star Equity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with State Street and Star Equity

The main advantage of trading using opposite State Street and Star Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Star Equity 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 Star Equity will offset losses from the drop in Star Equity's long position.
The idea behind State Street Corp and Star Equity Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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