Correlation Between State Farm and Angel Oak
Can any of the company-specific risk be diversified away by investing in both State Farm and Angel Oak 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 Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Farm International and Angel Oak Ultrashort, you can compare the effects of market volatilities on State Farm and Angel Oak 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 Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and Angel Oak.
Diversification Opportunities for State Farm and Angel Oak
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between State and Angel is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding State Farm International and Angel Oak Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Ultrashort 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 International are associated (or correlated) with Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Ultrashort has no effect on the direction of State Farm i.e., State Farm and Angel Oak go up and down completely randomly.
Pair Corralation between State Farm and Angel Oak
Assuming the 90 days horizon State Farm International is expected to generate 5.39 times more return on investment than Angel Oak. However, State Farm is 5.39 times more volatile than Angel Oak Ultrashort. It trades about 0.07 of its potential returns per unit of risk. Angel Oak Ultrashort is currently generating about 0.24 per unit of risk. If you would invest 1,367 in State Farm International on November 27, 2024 and sell it today you would earn a total of 281.00 from holding State Farm International or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm International vs. Angel Oak Ultrashort
Performance |
| Timeline |
| State Farm International |
| Angel Oak Ultrashort |
State Farm and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and Angel Oak
The main advantage of trading using opposite State Farm and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, Angel Oak 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 Angel Oak will offset losses from the drop in Angel Oak's long position.| State Farm vs. Advent Claymore Convertible | State Farm vs. The Gamco Global | State Farm vs. Lord Abbett Vertible | State Farm vs. Victory Incore Investment |
| Angel Oak vs. Rational Strategic Allocation | Angel Oak vs. Pnc Balanced Allocation | Angel Oak vs. Alternative Asset Allocation | Angel Oak vs. Balanced Allocation Fund |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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