Correlation Between Gmo High and State Farm
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and State Farm International, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and State Farm.
Diversification Opportunities for Gmo High and State Farm
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gmo and State is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and State Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm International and Gmo High 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 Gmo High Yield 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 International has no effect on the direction of Gmo High i.e., Gmo High and State Farm go up and down completely randomly.
Pair Corralation between Gmo High and State Farm
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.49 times more return on investment than State Farm. However, Gmo High Yield is 2.03 times less risky than State Farm. It trades about 0.15 of its potential returns per unit of risk. State Farm International is currently generating about 0.07 per unit of risk. If you would invest 1,657 in Gmo High Yield on September 14, 2024 and sell it today you would earn a total of 155.00 from holding Gmo High Yield or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Gmo High Yield vs. State Farm International
Performance |
| Timeline |
| Gmo High Yield |
| State Farm International |
Gmo High and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and State Farm
The main advantage of trading using opposite Gmo High and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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.| Gmo High vs. Commodities Strategy Fund | Gmo High vs. T Rowe Price | Gmo High vs. T Rowe Price | Gmo High vs. T Rowe Price |
| State Farm vs. Vy Columbia Small | State Farm vs. Smallcap Growth Fund | State Farm vs. Lebenthal Lisanti Small | State Farm vs. Mutual Of America |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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