Correlation Between Boston Partners and State Farm
Can any of the company-specific risk be diversified away by investing in both Boston Partners 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 Boston Partners and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Partners Small and State Farm Growth, you can compare the effects of market volatilities on Boston Partners 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 Boston Partners with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and State Farm.
Diversification Opportunities for Boston Partners and State Farm
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and State is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small 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 Boston Partners 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 Boston Partners Small 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 Boston Partners i.e., Boston Partners and State Farm go up and down completely randomly.
Pair Corralation between Boston Partners and State Farm
Assuming the 90 days horizon Boston Partners is expected to generate 1.44 times less return on investment than State Farm. In addition to that, Boston Partners is 1.55 times more volatile than State Farm Growth. It trades about 0.04 of its total potential returns per unit of risk. State Farm Growth is currently generating about 0.09 per unit of volatility. If you would invest 9,485 in State Farm Growth on August 31, 2024 and sell it today you would earn a total of 3,654 from holding State Farm Growth or generate 38.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Boston Partners Small vs. State Farm Growth
Performance |
| Timeline |
| Boston Partners Small |
| State Farm Growth |
Boston Partners and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Partners and State Farm
The main advantage of trading using opposite Boston Partners and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners 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.| Boston Partners vs. Aggressive Investors 1 | Boston Partners vs. Buffalo Small Cap | Boston Partners vs. Rice Hall James | Boston Partners vs. Putnam Small Cap |
| State Farm vs. Tax Managed Mid Small | State Farm vs. The Hartford Small | State Farm vs. T Rowe Price | State Farm vs. Ab Small Cap |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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