Correlation Between State Street and Delaware Emerging
Can any of the company-specific risk be diversified away by investing in both State Street and Delaware Emerging 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 Delaware Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Emerging and Delaware Emerging Markets, you can compare the effects of market volatilities on State Street and Delaware Emerging 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 Delaware Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Delaware Emerging.
Diversification Opportunities for State Street and Delaware Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Delaware is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding State Street Emerging and Delaware Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Emerging Markets 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 Emerging are associated (or correlated) with Delaware Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Emerging Markets has no effect on the direction of State Street i.e., State Street and Delaware Emerging go up and down completely randomly.
Pair Corralation between State Street and Delaware Emerging
Assuming the 90 days horizon State Street is expected to generate 2.7 times less return on investment than Delaware Emerging. But when comparing it to its historical volatility, State Street Emerging is 1.18 times less risky than Delaware Emerging. It trades about 0.04 of its potential returns per unit of risk. Delaware Emerging Markets is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,698 in Delaware Emerging Markets on January 19, 2024 and sell it today you would earn a total of 387.00 from holding Delaware Emerging Markets or generate 22.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Emerging vs. Delaware Emerging Markets
Performance |
| Timeline |
| State Street Emerging |
| Delaware Emerging Markets |
State Street and Delaware Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Delaware Emerging
The main advantage of trading using opposite State Street and Delaware Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Delaware Emerging 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 Delaware Emerging will offset losses from the drop in Delaware Emerging's long position.| State Street vs. Vanguard Emerging Markets | State Street vs. American Funds New | State Street vs. American Funds New | State Street vs. New World Fund |
| Delaware Emerging vs. Vanguard Emerging Markets | Delaware Emerging vs. American Funds New | Delaware Emerging vs. American Funds New | Delaware Emerging vs. New World Fund |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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