Correlation Between State Farm and American Funds
Can any of the company-specific risk be diversified away by investing in both State Farm and American Funds 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 American Funds 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 American Funds Inflation, you can compare the effects of market volatilities on State Farm and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and American Funds.
Diversification Opportunities for State Farm and American Funds
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and American is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding State Farm Growth and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inflation has no effect on the direction of State Farm i.e., State Farm and American Funds go up and down completely randomly.
Pair Corralation between State Farm and American Funds
Assuming the 90 days horizon State Farm Growth is expected to generate 1.96 times more return on investment than American Funds. However, State Farm is 1.96 times more volatile than American Funds Inflation. It trades about 0.25 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.29 per unit of risk. If you would invest 12,917 in State Farm Growth on September 13, 2024 and sell it today you would earn a total of 261.00 from holding State Farm Growth or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm Growth vs. American Funds Inflation
Performance |
| Timeline |
| State Farm Growth |
| American Funds Inflation |
State Farm and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and American Funds
The main advantage of trading using opposite State Farm and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| State Farm vs. Old Westbury Small | State Farm vs. Ab Small Cap | State Farm vs. Lebenthal Lisanti Small | State Farm vs. Ab Small Cap |
| American Funds vs. Goldman Sachs Clean | American Funds vs. Great West Goldman Sachs | American Funds vs. Sprott Gold Equity | American Funds vs. Precious Metals And |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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