Correlation Between State Street and Orestone Mining
Can any of the company-specific risk be diversified away by investing in both State Street and Orestone Mining 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 Orestone Mining 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 Orestone Mining Corp, you can compare the effects of market volatilities on State Street and Orestone Mining 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 Orestone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Orestone Mining.
Diversification Opportunities for State Street and Orestone Mining
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between State and Orestone is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and Orestone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orestone Mining Corp 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 Orestone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orestone Mining Corp has no effect on the direction of State Street i.e., State Street and Orestone Mining go up and down completely randomly.
Pair Corralation between State Street and Orestone Mining
Considering the 90-day investment horizon State Street is expected to generate 10.46 times less return on investment than Orestone Mining. But when comparing it to its historical volatility, State Street Corp is 5.31 times less risky than Orestone Mining. It trades about 0.02 of its potential returns per unit of risk. Orestone Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Orestone Mining Corp on January 26, 2024 and sell it today you would lose (1.00) from holding Orestone Mining Corp or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Corp vs. Orestone Mining Corp
Performance |
| Timeline |
| State Street Corp |
| Orestone Mining Corp |
State Street and Orestone Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Orestone Mining
The main advantage of trading using opposite State Street and Orestone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Orestone Mining 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 Orestone Mining will offset losses from the drop in Orestone Mining's long position.| State Street vs. Invesco Plc | State Street vs. Franklin Resources | State Street vs. T Rowe Price | State Street vs. SEI Investments |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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