Correlation Between State Farm and Origin Emerging
Can any of the company-specific risk be diversified away by investing in both State Farm and Origin Emerging 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 Origin Emerging 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 Origin Emerging Markets, you can compare the effects of market volatilities on State Farm and Origin Emerging 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 Origin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and Origin Emerging.
Diversification Opportunities for State Farm and Origin Emerging
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Origin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding State Farm Growth and Origin Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Emerging 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 Origin Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Emerging Markets has no effect on the direction of State Farm i.e., State Farm and Origin Emerging go up and down completely randomly.
Pair Corralation between State Farm and Origin Emerging
Assuming the 90 days horizon State Farm Growth is expected to generate 0.65 times more return on investment than Origin Emerging. However, State Farm Growth is 1.53 times less risky than Origin Emerging. It trades about 0.43 of its potential returns per unit of risk. Origin Emerging Markets is currently generating about -0.02 per unit of risk. If you would invest 12,557 in State Farm Growth on September 1, 2024 and sell it today you would earn a total of 653.00 from holding State Farm Growth or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Farm Growth vs. Origin Emerging Markets
Performance |
| Timeline |
| State Farm Growth |
| Origin Emerging Markets |
State Farm and Origin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Farm and Origin Emerging
The main advantage of trading using opposite State Farm and Origin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, Origin Emerging 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 Origin Emerging will offset losses from the drop in Origin Emerging's long position.| State Farm vs. Pace Municipal Fixed | State Farm vs. Ab Impact Municipal | State Farm vs. Morningstar Municipal Bond | State Farm vs. Blrc Sgy Mnp |
| Origin Emerging vs. Meeder Funds | Origin Emerging vs. Dws Government Money | Origin Emerging vs. Lord Abbett Govt | Origin Emerging vs. Ashmore Emerging Markets |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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