Correlation Between Emerging Markets and State Street

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

Diversification Opportunities for Emerging Markets and State Street

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Emerging and State is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EMERGING MARKETS BREAKOUT and STATE STREET DISCIPLINED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Disciplined and Emerging Markets 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 Emerging Markets Breakout 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 Disciplined has no effect on the direction of Emerging Markets i.e., Emerging Markets and State Street go up and down completely randomly.

Pair Corralation between Emerging Markets and State Street

If you would invest  0.00  in State Street Disciplined on December 30, 2023 and sell it today you would earn a total of  0.00  from holding State Street Disciplined or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

EMERGING MARKETS BREAKOUT  vs.  STATE STREET DISCIPLINED

 Performance 
       Timeline  
Emerging Markets Breakout 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days State Street Disciplined 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.

Emerging Markets and State Street Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Emerging Markets and State Street

The main advantage of trading using opposite Emerging Markets and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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 Emerging Markets Breakout and State Street Disciplined 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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