Correlation Between State Street and Intermail
Can any of the company-specific risk be diversified away by investing in both State Street and Intermail 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 Intermail 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 Intermail AS, you can compare the effects of market volatilities on State Street and Intermail 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 Intermail. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Intermail.
Diversification Opportunities for State Street and Intermail
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Intermail is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding State Street Aggregate and Intermail AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermail AS 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 Intermail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermail AS has no effect on the direction of State Street i.e., State Street and Intermail go up and down completely randomly.
Pair Corralation between State Street and Intermail
Assuming the 90 days horizon State Street Aggregate is expected to generate 0.24 times more return on investment than Intermail. However, State Street Aggregate is 4.14 times less risky than Intermail. It trades about -0.25 of its potential returns per unit of risk. Intermail AS is currently generating about -0.1 per unit of risk. If you would invest 8,514 in State Street Aggregate on January 26, 2024 and sell it today you would lose (179.00) from holding State Street Aggregate or give up 2.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 86.36% |
Values | Daily Returns |
State Street Aggregate vs. Intermail AS
Performance |
Timeline |
State Street Aggregate |
Intermail AS |
State Street and Intermail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Street and Intermail
The main advantage of trading using opposite State Street and Intermail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Intermail 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 Intermail will offset losses from the drop in Intermail's long position.State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Aggregate |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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