Correlation Between State Street and Disciplined Growth

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

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

Diversification Opportunities for State Street and Disciplined Growth

-0.04

Correlation Coefficient

State Street  Disciplined Growth

Good diversification

The 3 months correlation between State and Disciplined is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding State Street Institutional and Disciplined Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Disciplined Growth 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 Institutional are associated (or correlated) with Disciplined Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Disciplined Growth has no effect on the direction of State Street i.e., State Street and Disciplined Growth go up and down completely randomly.

Pair Corralation between State Street and Disciplined Growth

Assuming the 90 days horizon State Street Institutional is expected to under-perform the Disciplined Growth. In addition to that, State Street is 1.07 times more volatile than Disciplined Growth Fund. It trades about -0.02 of its total potential returns per unit of risk. Disciplined Growth Fund is currently generating about 0.1 per unit of volatility. If you would invest  2,492  in Disciplined Growth Fund on September 8, 2025 and sell it today you would earn a total of  156.00  from holding Disciplined Growth Fund or generate 6.26% return on investment over 90 days.

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

State Street Institutional  vs.  Disciplined Growth Fund

State Street Institu

Risk-Adjusted Performance

Weakest

Over the last 90 days State Street Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Disciplined Growth

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Disciplined Growth Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Disciplined Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with State Street and Disciplined Growth

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

The idea behind State Street Institutional and Disciplined Growth Fund 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.