Correlation Between State Street and ETRADE Financial

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Can any of the company-specific risk be diversified away by investing in both State Street and ETRADE 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 ETRADE 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 ETRADE Financial LLC, you can compare the effects of market volatilities on State Street and ETRADE 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 ETRADE Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and ETRADE Financial.

Diversification Opportunities for State Street and ETRADE Financial

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between State Street and ETRADE Financial

If you would invest (100.00) in ETRADE Financial LLC on December 29, 2023 and sell it today you would earn a total of  100.00  from holding ETRADE Financial LLC or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

State Street Corp  vs.  ETRADE Financial LLC

 Performance 
       Timeline  
State Street Corp 

Risk-Adjusted Performance

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Over the last 90 days State Street Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Street is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
ETRADE Financial LLC 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days ETRADE Financial LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ETRADE Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

State Street and ETRADE Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with State Street and ETRADE Financial

The main advantage of trading using opposite State Street and ETRADE Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, ETRADE 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 ETRADE Financial will offset losses from the drop in ETRADE Financial's long position.
The idea behind State Street Corp and ETRADE Financial LLC 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.
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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