Correlation Between State Farm and Aqr Long
Can any of the company-specific risk be diversified away by investing in both State Farm and Aqr Long 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 State Farm and Aqr Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Farm Municipal and Aqr Long Short Equity, you can compare the effects of market volatilities on State Farm and Aqr Long 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 State Farm with a short position of Aqr Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and Aqr Long.
Diversification Opportunities for State Farm and Aqr Long
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Aqr is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding State Farm Municipal and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and State Farm 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 State Farm Municipal are associated (or correlated) with Aqr Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of State Farm i.e., State Farm and Aqr Long go up and down completely randomly.
Pair Corralation between State Farm and Aqr Long
Assuming the 90 days horizon State Farm is expected to generate 5.11 times less return on investment than Aqr Long. But when comparing it to its historical volatility, State Farm Municipal is 1.88 times less risky than Aqr Long. It trades about 0.18 of its potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 1,579 in Aqr Long Short Equity on September 3, 2024 and sell it today you would earn a total of 71.00 from holding Aqr Long Short Equity or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm Municipal vs. Aqr Long Short Equity
Performance |
| Timeline |
| State Farm Municipal |
| Aqr Long Short |
State Farm and Aqr Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and Aqr Long
The main advantage of trading using opposite State Farm and Aqr Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, Aqr Long 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 Aqr Long will offset losses from the drop in Aqr Long's long position.| State Farm vs. Aam Select Income | State Farm vs. Rbc Microcap Value | State Farm vs. Volumetric Fund Volumetric | State Farm vs. Fa 529 Aggressive |
| Aqr Long vs. T Rowe Price | Aqr Long vs. Vanguard California Long Term | Aqr Long vs. Transamerica Funds | Aqr Long vs. Nuveen Minnesota Municipal |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |