Correlation Between State Street and Target

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

Diversification Opportunities for State Street and Target

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between State Street and Target

If you would invest (100.00) in State Street Disciplined on December 19, 2023 and sell it today you would earn a total of  100.00  from holding State Street Disciplined or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

STATE STREET DISCIPLINED  vs.  Target

 Performance 
       Timeline  
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.
Target 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Target unveiled solid returns over the last few months and may actually be approaching a breakup point.

State Street and Target Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with State Street and Target

The main advantage of trading using opposite State Street and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.
The idea behind State Street Disciplined and Target 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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