Correlation Between State Street and HAL Trust

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

Diversification Opportunities for State Street and HAL Trust

0.77

Correlation Coefficient

State Street  HAL Trust

Poor diversification

The 3 months correlation between State and HAL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and HAL Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAL Trust 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 HAL Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAL Trust has no effect on the direction of State Street i.e., State Street and HAL Trust go up and down completely randomly.

Pair Corralation between State Street and HAL Trust

Considering the 90-day investment horizon State Street Corp is expected to generate 1.42 times more return on investment than HAL Trust. However, State Street is 1.42 times more volatile than HAL Trust. It trades about 0.02 of its potential returns per unit of risk. HAL Trust is currently generating about 0.01 per unit of risk. If you would invest  6,353  in State Street Corp on February 3, 2024 and sell it today you would earn a total of  967.00  from holding State Street Corp or generate 15.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

State Street Corp  vs.  HAL Trust

State Street Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, State Street is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

HAL Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HAL Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, HAL Trust may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with State Street and HAL Trust

The main advantage of trading using opposite State Street and HAL Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, HAL Trust 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 HAL Trust will offset losses from the drop in HAL Trust's long position.

The idea behind State Street Corp and HAL Trust 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.