Correlation Between NYSE Composite and State Farm
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and State Farm Growth, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and State Farm.
Diversification Opportunities for NYSE Composite and State Farm
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and State is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and State Farm go up and down completely randomly.
Pair Corralation between NYSE Composite and State Farm
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.13 times less return on investment than State Farm. But when comparing it to its historical volatility, NYSE Composite is 1.11 times less risky than State Farm. It trades about 0.08 of its potential returns per unit of risk. State Farm Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,688 in State Farm Growth on August 29, 2024 and sell it today you would earn a total of 3,468 from holding State Farm Growth or generate 35.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. State Farm Growth
Performance |
| Timeline |
NYSE Composite and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
State Farm Growth
Pair trading matchups for State Farm
Pair Trading with NYSE Composite and State Farm
The main advantage of trading using opposite NYSE Composite and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| State Farm vs. Origin Emerging Markets | State Farm vs. Ashmore Emerging Markets | State Farm vs. Rbc Bluebay Emerging | State Farm vs. Pnc Emerging Markets |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |