Correlation Between Maryland Tax-free and State Farm
Can any of the company-specific risk be diversified away by investing in both Maryland Tax-free and State Farm 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 Maryland Tax-free and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maryland Tax Free Bond and State Farm Interim, you can compare the effects of market volatilities on Maryland Tax-free and State Farm 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 Maryland Tax-free with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maryland Tax-free and State Farm.
Diversification Opportunities for Maryland Tax-free and State Farm
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Maryland and State is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Maryland Tax Free Bond and State Farm Interim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Interim and Maryland Tax-free 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 Maryland Tax Free Bond are associated (or correlated) with State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm Interim has no effect on the direction of Maryland Tax-free i.e., Maryland Tax-free and State Farm go up and down completely randomly.
Pair Corralation between Maryland Tax-free and State Farm
Assuming the 90 days horizon Maryland Tax Free Bond is expected to generate 1.45 times more return on investment than State Farm. However, Maryland Tax-free is 1.45 times more volatile than State Farm Interim. It trades about 0.11 of its potential returns per unit of risk. State Farm Interim is currently generating about 0.1 per unit of risk. If you would invest 1,002 in Maryland Tax Free Bond on November 22, 2024 and sell it today you would earn a total of 5.00 from holding Maryland Tax Free Bond or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maryland Tax Free Bond vs. State Farm Interim
Performance |
| Timeline |
| Maryland Tax Free |
| State Farm Interim |
Maryland Tax-free and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maryland Tax-free and State Farm
The main advantage of trading using opposite Maryland Tax-free and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maryland Tax-free position performs unexpectedly, State Farm 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 State Farm will offset losses from the drop in State Farm's long position.| Maryland Tax-free vs. Locorr Dynamic Equity | Maryland Tax-free vs. Old Westbury Fixed | Maryland Tax-free vs. Qs Global Equity | Maryland Tax-free vs. Rbc Global Equity |
| State Farm vs. Fidelity Sai Inflationfocused | State Farm vs. Ab Bond Inflation | State Farm vs. Ab Bond Inflation | State Farm vs. Tiaa Cref Inflation Link |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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