Correlation Between State Street and Stifel Financial
Can any of the company-specific risk be diversified away by investing in both State Street and Stifel Financial 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 Stifel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and Stifel Financial, you can compare the effects of market volatilities on State Street and Stifel Financial 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 Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Stifel Financial.
Diversification Opportunities for State Street and Stifel Financial
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between State and Stifel is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial 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 Corp are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of State Street i.e., State Street and Stifel Financial go up and down completely randomly.
Pair Corralation between State Street and Stifel Financial
Considering the 90-day investment horizon State Street is expected to generate 1.48 times less return on investment than Stifel Financial. In addition to that, State Street is 1.09 times more volatile than Stifel Financial. It trades about 0.04 of its total potential returns per unit of risk. Stifel Financial is currently generating about 0.06 per unit of volatility. If you would invest 5,164 in Stifel Financial on January 19, 2024 and sell it today you would earn a total of 2,324 from holding Stifel Financial or generate 45.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Corp vs. Stifel Financial
Performance |
| Timeline |
| State Street Corp |
| Stifel Financial |
State Street and Stifel Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Stifel Financial
The main advantage of trading using opposite State Street and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial's long position.| State Street vs. Invesco Plc | State Street vs. Franklin Resources | State Street vs. T Rowe Price | State Street vs. SEI Investments |
| Stifel Financial vs. Riot Blockchain | Stifel Financial vs. Marathon Digital Holdings | Stifel Financial vs. Hut 8 Corp | Stifel Financial vs. CleanSpark |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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