Correlation Between Technology Communications and State Street

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

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

Diversification Opportunities for Technology Communications and State Street

0.99

Correlation Coefficient

Technology Communications  State Street

No risk reduction

The 3 months correlation between Technology and State is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Technology Munications Portfol 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 Technology Communications 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 Technology Munications Portfolio 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 Technology Communications i.e., Technology Communications and State Street go up and down completely randomly.

Pair Corralation between Technology Communications and State Street

Assuming the 90 days horizon Technology Communications is expected to generate 1.08 times less return on investment than State Street. In addition to that, Technology Communications is 1.05 times more volatile than State Street Premier. It trades about 0.2 of its total potential returns per unit of risk. State Street Premier is currently generating about 0.23 per unit of volatility. If you would invest  11,561  in State Street Premier on May 15, 2025 and sell it today you would earn a total of  1,358  from holding State Street Premier or generate 11.75% return on investment over 90 days.

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

Technology Munications Portfol  vs.  State Street Premier

Technology Communications

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Munications Portfolio are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Communications may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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.

Pair Trading with Technology Communications and State Street

The main advantage of trading using opposite Technology Communications and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Communications 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 Technology Munications Portfolio 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.