Correlation Between State Street and Sit Developing

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

By analyzing existing cross correlation between State Street Premier and Sit Developing Markets, you can compare the effects of market volatilities on State Street and Sit Developing 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 Sit Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Sit Developing.

Diversification Opportunities for State Street and Sit Developing

0.97

Correlation Coefficient

State Street  Sit Developing

Almost no diversification

The 3 months correlation between State and Sit is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding State Street Premier and Sit Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Developing Markets 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 Premier are associated (or correlated) with Sit Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Developing Markets has no effect on the direction of State Street i.e., State Street and Sit Developing go up and down completely randomly.

Pair Corralation between State Street and Sit Developing

Assuming the 90 days horizon State Street Premier is expected to generate 1.11 times more return on investment than Sit Developing. However, State Street is 1.11 times more volatile than Sit Developing Markets. It trades about 0.24 of its potential returns per unit of risk. Sit Developing Markets is currently generating about 0.2 per unit of risk. If you would invest  11,568  in State Street Premier on May 14, 2025 and sell it today you would earn a total of  1,397  from holding State Street Premier or generate 12.08% return on investment over 90 days.

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

State Street Premier  vs.  Sit Developing Markets

State Street Premier

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Premier are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, State Street may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Sit Developing Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Developing Markets are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Sit Developing may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with State Street and Sit Developing

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

The idea behind State Street Premier and Sit Developing Markets 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.