Correlation Between State Street and GN Store
Can any of the company-specific risk be diversified away by investing in both State Street and GN Store 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 GN Store into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Aggregate and GN Store Nord, you can compare the effects of market volatilities on State Street and GN Store 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 GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and GN Store.
Diversification Opportunities for State Street and GN Store
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and GN Store is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding State Street Aggregate and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord 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 Aggregate are associated (or correlated) with GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of State Street i.e., State Street and GN Store go up and down completely randomly.
Pair Corralation between State Street and GN Store
Assuming the 90 days horizon State Street Aggregate is expected to under-perform the GN Store. But the mutual fund apears to be less risky and, when comparing its historical volatility, State Street Aggregate is 6.18 times less risky than GN Store. The mutual fund trades about -0.21 of its potential returns per unit of risk. The GN Store Nord is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 18,620 in GN Store Nord on January 25, 2024 and sell it today you would lose (205.00) from holding GN Store Nord or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
State Street Aggregate vs. GN Store Nord
Performance |
| Timeline |
| State Street Aggregate |
| GN Store Nord |
State Street and GN Store Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and GN Store
The main advantage of trading using opposite State Street and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, GN Store 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 GN Store will offset losses from the drop in GN Store's long position.| State Street vs. Guidemark Smallmid Cap | State Street vs. Calvert Smallmid Cap A | State Street vs. Franklin Small Cap | State Street vs. Rbc Small Cap |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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