Correlation Between State Farm and State Farm
Can any of the company-specific risk be diversified away by investing in both State Farm 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 State Farm and State Farm 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 State Farm Interim, you can compare the effects of market volatilities on State Farm 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 State Farm with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and State Farm.
Diversification Opportunities for State Farm and State Farm
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and State is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding State Farm International 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 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 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 State Farm i.e., State Farm and State Farm go up and down completely randomly.
Pair Corralation between State Farm and State Farm
Assuming the 90 days horizon State Farm International is expected to generate 2.87 times more return on investment than State Farm. However, State Farm is 2.87 times more volatile than State Farm Interim. It trades about 0.07 of its potential returns per unit of risk. State Farm Interim is currently generating about 0.06 per unit of risk. If you would invest 1,360 in State Farm International on August 29, 2024 and sell it today you would earn a total of 324.00 from holding State Farm International or generate 23.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm International vs. State Farm Interim
Performance |
| Timeline |
| State Farm International |
| State Farm Interim |
State Farm and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and State Farm
The main advantage of trading using opposite State Farm and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm 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.| State Farm vs. Angel Oak Ultrashort | State Farm vs. Barings Active Short | State Farm vs. Federated Short Intermediate Duration | State Farm vs. Blrc Sgy Mnp |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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