Correlation Between Aqr Managed and State Farm
Can any of the company-specific risk be diversified away by investing in both Aqr Managed 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 Managed 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 Managed Futures and State Farm Balanced, you can compare the effects of market volatilities on Aqr Managed 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 Managed with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Managed and State Farm.
Diversification Opportunities for Aqr Managed and State Farm
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aqr and State is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Managed Futures and State Farm Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Balanced and Aqr Managed 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 Managed Futures 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 Balanced has no effect on the direction of Aqr Managed i.e., Aqr Managed and State Farm go up and down completely randomly.
Pair Corralation between Aqr Managed and State Farm
Assuming the 90 days horizon Aqr Managed is expected to generate 2.96 times less return on investment than State Farm. In addition to that, Aqr Managed is 1.77 times more volatile than State Farm Balanced. It trades about 0.02 of its total potential returns per unit of risk. State Farm Balanced is currently generating about 0.12 per unit of volatility. If you would invest 7,213 in State Farm Balanced on September 13, 2024 and sell it today you would earn a total of 2,642 from holding State Farm Balanced or generate 36.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aqr Managed Futures vs. State Farm Balanced
Performance |
| Timeline |
| Aqr Managed Futures |
| State Farm Balanced |
Aqr Managed and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Managed and State Farm
The main advantage of trading using opposite Aqr Managed and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Managed 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 Managed vs. Ab Discovery Value | Aqr Managed vs. Heartland Value Plus | Aqr Managed vs. Ab Small Cap | Aqr Managed vs. Fpa Queens Road |
| State Farm vs. Aqr Managed Futures | State Farm vs. Lord Abbett Inflation | State Farm vs. Guggenheim Managed Futures | State Farm vs. Guidepath Managed Futures |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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