Correlation Between Vulcan Value and State Street

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

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

Diversification Opportunities for Vulcan Value and State Street

0.95

Correlation Coefficient

Vulcan Value  State Street

Almost no diversification

The 3 months correlation between Vulcan and State is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Value Partners and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target and Vulcan Value 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 Vulcan Value Partners 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 Target has no effect on the direction of Vulcan Value i.e., Vulcan Value and State Street go up and down completely randomly.

Pair Corralation between Vulcan Value and State Street

Assuming the 90 days horizon Vulcan Value Partners is expected to generate 2.22 times more return on investment than State Street. However, Vulcan Value is 2.22 times more volatile than State Street Target. It trades about 0.22 of its potential returns per unit of risk. State Street Target is currently generating about 0.34 per unit of risk. If you would invest  1,094  in Vulcan Value Partners on April 25, 2025 and sell it today you would earn a total of  172.00  from holding Vulcan Value Partners or generate 15.72% return on investment over 90 days.

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

Vulcan Value Partners  vs.  State Street Target

Vulcan Value Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Value Partners are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vulcan Value showed solid returns over the last few months and may actually be approaching a breakup point.

State Street Target

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Target are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, State Street may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Vulcan Value and State Street

The main advantage of trading using opposite Vulcan Value and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Value 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 Vulcan Value Partners and State Street Target 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.