Correlation Between State Farm and Fidelity New
Can any of the company-specific risk be diversified away by investing in both State Farm and Fidelity New 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 Fidelity New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Farm Growth and Fidelity New Markets, you can compare the effects of market volatilities on State Farm and Fidelity New 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 Fidelity New. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and Fidelity New.
Diversification Opportunities for State Farm and Fidelity New
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between State and Fidelity is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding State Farm Growth and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets 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 Growth are associated (or correlated) with Fidelity New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of State Farm i.e., State Farm and Fidelity New go up and down completely randomly.
Pair Corralation between State Farm and Fidelity New
Assuming the 90 days horizon State Farm Growth is expected to generate 1.97 times more return on investment than Fidelity New. However, State Farm is 1.97 times more volatile than Fidelity New Markets. It trades about 0.1 of its potential returns per unit of risk. Fidelity New Markets is currently generating about 0.12 per unit of risk. If you would invest 9,723 in State Farm Growth on August 26, 2024 and sell it today you would earn a total of 3,245 from holding State Farm Growth or generate 33.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm Growth vs. Fidelity New Markets
Performance |
| Timeline |
| State Farm Growth |
| Fidelity New Markets |
State Farm and Fidelity New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and Fidelity New
The main advantage of trading using opposite State Farm and Fidelity New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, Fidelity New 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 Fidelity New will offset losses from the drop in Fidelity New's long position.| State Farm vs. Pgim Conservative Retirement | State Farm vs. American Funds Conservative | State Farm vs. Aqr Diversified Arbitrage | State Farm vs. Evaluator Conservative Rms |
| Fidelity New vs. Ab Bond Inflation | Fidelity New vs. Ab Bond Inflation | Fidelity New vs. Lord Abbett Inflation | Fidelity New vs. Atac Inflation Rotation |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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