Correlation Between Rbc Bluebay and State Farm
Can any of the company-specific risk be diversified away by investing in both Rbc Bluebay 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 Rbc Bluebay and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rbc Bluebay Global and State Farm Interim, you can compare the effects of market volatilities on Rbc Bluebay 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 Rbc Bluebay with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Bluebay and State Farm.
Diversification Opportunities for Rbc Bluebay and State Farm
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rbc and State is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Bluebay Global and State Farm Interim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Interim and Rbc Bluebay 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 Rbc Bluebay Global 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 Interim has no effect on the direction of Rbc Bluebay i.e., Rbc Bluebay and State Farm go up and down completely randomly.
Pair Corralation between Rbc Bluebay and State Farm
Assuming the 90 days horizon Rbc Bluebay Global is expected to generate 0.75 times more return on investment than State Farm. However, Rbc Bluebay Global is 1.34 times less risky than State Farm. It trades about 0.39 of its potential returns per unit of risk. State Farm Interim is currently generating about 0.03 per unit of risk. If you would invest 988.00 in Rbc Bluebay Global on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Rbc Bluebay Global or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rbc Bluebay Global vs. State Farm Interim
Performance |
| Timeline |
| Rbc Bluebay Global |
| State Farm Interim |
Rbc Bluebay and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rbc Bluebay and State Farm
The main advantage of trading using opposite Rbc Bluebay and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rbc Bluebay 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.| Rbc Bluebay vs. Jpmorgan Income Fund | Rbc Bluebay vs. Prudential High Yield | Rbc Bluebay vs. Parametric Modity Strategy | Rbc Bluebay vs. Prudential Floating Rate |
| State Farm vs. State Farm Growth | State Farm vs. State Farm Balanced | State Farm vs. State Farm Municipal | State Farm vs. State Farm International |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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