Correlation Between Federated International and State Street

Can any of the company-specific risk be diversified away by investing in both Federated International and State Street 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 Federated International and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federated International Small Mid and State Street Income, you can compare the effects of market volatilities on Federated International and State Street 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 Federated International with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated International and State Street.

Diversification Opportunities for Federated International and State Street

0.82

Correlation Coefficient

Federated International  State Street

Very poor diversification

The 3 months correlation between Federated and State is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Federated International Small and State Street Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Income and Federated International 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 Federated International Small Mid are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Income has no effect on the direction of Federated International i.e., Federated International and State Street go up and down completely randomly.

Pair Corralation between Federated International and State Street

Assuming the 90 days horizon Federated International Small Mid is expected to generate 1.91 times more return on investment than State Street. However, Federated International is 1.91 times more volatile than State Street Income. It trades about 0.22 of its potential returns per unit of risk. State Street Income is currently generating about 0.11 per unit of risk. If you would invest  3,074  in Federated International Small Mid on May 15, 2025 and sell it today you would earn a total of  268.00  from holding Federated International Small Mid or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Federated International Small   vs.  State Street Income

Federated International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated International Small Mid are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Federated International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

State Street Income

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Income are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, State Street is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated International and State Street

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

The idea behind Federated International Small Mid and State Street Income 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.