Correlation Between Aqr Diversified and State Farm
Can any of the company-specific risk be diversified away by investing in both Aqr Diversified and State Farm 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 Aqr Diversified and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Diversified Arbitrage and State Farm Growth, you can compare the effects of market volatilities on Aqr Diversified and State Farm 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 Aqr Diversified with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Diversified and State Farm.
Diversification Opportunities for Aqr Diversified and State Farm
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between AQR and State is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Diversified Arbitrage and State Farm Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Growth and Aqr Diversified 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 Aqr Diversified Arbitrage are associated (or correlated) with State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm Growth has no effect on the direction of Aqr Diversified i.e., Aqr Diversified and State Farm go up and down completely randomly.
Pair Corralation between Aqr Diversified and State Farm
Assuming the 90 days horizon Aqr Diversified Arbitrage is expected to under-perform the State Farm. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aqr Diversified Arbitrage is 4.58 times less risky than State Farm. The mutual fund trades about -0.08 of its potential returns per unit of risk. The State Farm Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12,468 in State Farm Growth on August 25, 2024 and sell it today you would earn a total of 500.00 from holding State Farm Growth or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Aqr Diversified Arbitrage vs. State Farm Growth
Performance |
| Timeline |
| Aqr Diversified Arbitrage |
| State Farm Growth |
Aqr Diversified and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Diversified and State Farm
The main advantage of trading using opposite Aqr Diversified and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Diversified position performs unexpectedly, State Farm 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 Farm will offset losses from the drop in State Farm's long position.| Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr Large Cap | Aqr Diversified vs. Aqr International Defensive | Aqr Diversified vs. Aqr International Defensive |
| State Farm vs. Pgim Conservative Retirement | State Farm vs. American Funds Conservative | State Farm vs. Aqr Diversified Arbitrage | State Farm vs. Evaluator Conservative Rms |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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