Correlation Between State Farm and Fidelity Advisor
Can any of the company-specific risk be diversified away by investing in both State Farm and Fidelity Advisor 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 Advisor 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 Advisor Health, you can compare the effects of market volatilities on State Farm and Fidelity Advisor 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 Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and Fidelity Advisor.
Diversification Opportunities for State Farm and Fidelity Advisor
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Fidelity is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding State Farm Growth and Fidelity Advisor Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Health 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 Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Health has no effect on the direction of State Farm i.e., State Farm and Fidelity Advisor go up and down completely randomly.
Pair Corralation between State Farm and Fidelity Advisor
Assuming the 90 days horizon State Farm Growth is expected to generate 0.94 times more return on investment than Fidelity Advisor. However, State Farm Growth is 1.07 times less risky than Fidelity Advisor. It trades about 0.09 of its potential returns per unit of risk. Fidelity Advisor Health is currently generating about 0.03 per unit of risk. If you would invest 9,391 in State Farm Growth on September 12, 2024 and sell it today you would earn a total of 3,787 from holding State Farm Growth or generate 40.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm Growth vs. Fidelity Advisor Health
Performance |
| Timeline |
| State Farm Growth |
| Fidelity Advisor Health |
State Farm and Fidelity Advisor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and Fidelity Advisor
The main advantage of trading using opposite State Farm and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, Fidelity Advisor 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 Advisor will offset losses from the drop in Fidelity Advisor's long position.| State Farm vs. State Street Institutional | State Farm vs. State Street Institutional | State Farm vs. State Street Institutional | State Farm vs. State Street Institutional |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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