Correlation Between Old Westbury and State Street

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

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

Diversification Opportunities for Old Westbury and State Street

0.46

Correlation Coefficient

Old Westbury  State Street

Very weak diversification

The 3 months correlation between Old and State is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and State Street Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Premier and Old Westbury 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 Old Westbury Large 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 Premier has no effect on the direction of Old Westbury i.e., Old Westbury and State Street go up and down completely randomly.

Pair Corralation between Old Westbury and State Street

Assuming the 90 days horizon Old Westbury is expected to generate 1.73 times less return on investment than State Street. But when comparing it to its historical volatility, Old Westbury Large is 1.67 times less risky than State Street. It trades about 0.35 of its potential returns per unit of risk. State Street Premier is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  10,526  in State Street Premier on April 30, 2025 and sell it today you would earn a total of  2,402  from holding State Street Premier or generate 22.82% return on investment over 90 days.

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

Old Westbury Large  vs.  State Street Premier

Old Westbury Large

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Large are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Old Westbury may actually be approaching a critical reversion point that can send shares even higher in August 2025.

State Street Premier

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Premier are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, State Street showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Old Westbury and State Street

The main advantage of trading using opposite Old Westbury and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury 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 Old Westbury Large and State Street Premier 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..