Correlation Between Fidelity New and State Farm
Can any of the company-specific risk be diversified away by investing in both Fidelity New 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 Fidelity New and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity New Markets and State Farm Growth, you can compare the effects of market volatilities on Fidelity New 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 Fidelity New with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and State Farm.
Diversification Opportunities for Fidelity New and State Farm
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fidelity and State is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets 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 Fidelity New 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 Fidelity New Markets 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 Fidelity New i.e., Fidelity New and State Farm go up and down completely randomly.
Pair Corralation between Fidelity New and State Farm
Assuming the 90 days horizon Fidelity New is expected to generate 1.42 times less return on investment than State Farm. But when comparing it to its historical volatility, Fidelity New Markets is 1.95 times less risky than State Farm. It trades about 0.12 of its potential returns per unit of risk. State Farm Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 10,377 in State Farm Growth on August 29, 2024 and sell it today you would earn a total of 2,762 from holding State Farm Growth or generate 26.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity New Markets vs. State Farm Growth
Performance |
| Timeline |
| Fidelity New Markets |
| State Farm Growth |
Fidelity New and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity New and State Farm
The main advantage of trading using opposite Fidelity New and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New 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.| Fidelity New vs. HUMANA INC | Fidelity New vs. Aquagold International | Fidelity New vs. Barloworld Ltd ADR | Fidelity New vs. Morningstar Unconstrained Allocation |
| State Farm vs. American Mutual Fund | State Farm vs. Pace Large Value | State Farm vs. Transamerica Large Cap | State Farm vs. Fidelity Series 1000 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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