Correlation Between State Farm and Oaktree Diversifiedome
Can any of the company-specific risk be diversified away by investing in both State Farm and Oaktree Diversifiedome 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 Oaktree Diversifiedome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Farm Balanced and Oaktree Diversifiedome, you can compare the effects of market volatilities on State Farm and Oaktree Diversifiedome 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 Oaktree Diversifiedome. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and Oaktree Diversifiedome.
Diversification Opportunities for State Farm and Oaktree Diversifiedome
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between State and Oaktree is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding State Farm Balanced and Oaktree Diversifiedome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Diversifiedome 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 Balanced are associated (or correlated) with Oaktree Diversifiedome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Diversifiedome has no effect on the direction of State Farm i.e., State Farm and Oaktree Diversifiedome go up and down completely randomly.
Pair Corralation between State Farm and Oaktree Diversifiedome
Assuming the 90 days horizon State Farm Balanced is expected to generate 5.28 times more return on investment than Oaktree Diversifiedome. However, State Farm is 5.28 times more volatile than Oaktree Diversifiedome. It trades about 0.12 of its potential returns per unit of risk. Oaktree Diversifiedome is currently generating about 0.46 per unit of risk. If you would invest 7,913 in State Farm Balanced on August 26, 2024 and sell it today you would earn a total of 1,824 from holding State Farm Balanced or generate 23.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm Balanced vs. Oaktree Diversifiedome
Performance |
| Timeline |
| State Farm Balanced |
| Oaktree Diversifiedome |
State Farm and Oaktree Diversifiedome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and Oaktree Diversifiedome
The main advantage of trading using opposite State Farm and Oaktree Diversifiedome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, Oaktree Diversifiedome 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 Oaktree Diversifiedome will offset losses from the drop in Oaktree Diversifiedome's long position.| State Farm vs. Oaktree Diversifiedome | State Farm vs. Tiaa Cref Lifestyle Conservative | State Farm vs. Massmutual Premier Diversified | State Farm vs. Pioneer Diversified High |
| Oaktree Diversifiedome vs. Vanguard Total Stock | Oaktree Diversifiedome vs. Vanguard 500 Index | Oaktree Diversifiedome vs. Vanguard Total Stock | Oaktree Diversifiedome vs. Vanguard Total Stock |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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