Correlation Between Tiaa Cref and State Farm
Can any of the company-specific risk be diversified away by investing in both Tiaa Cref 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 Tiaa Cref and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Lifestyle Conservative and State Farm Balanced, you can compare the effects of market volatilities on Tiaa Cref 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 Tiaa Cref with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa Cref and State Farm.
Diversification Opportunities for Tiaa Cref and State Farm
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tiaa and State is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Lifestyle Conservati and State Farm Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Balanced and Tiaa Cref 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 Tiaa Cref Lifestyle Conservative 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 Balanced has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and State Farm go up and down completely randomly.
Pair Corralation between Tiaa Cref and State Farm
Assuming the 90 days horizon Tiaa Cref is expected to generate 1.47 times less return on investment than State Farm. But when comparing it to its historical volatility, Tiaa Cref Lifestyle Conservative is 1.4 times less risky than State Farm. It trades about 0.1 of its potential returns per unit of risk. State Farm Balanced is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,380 in State Farm Balanced on August 26, 2024 and sell it today you would earn a total of 2,357 from holding State Farm Balanced or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiaa Cref Lifestyle Conservati vs. State Farm Balanced
Performance |
| Timeline |
| Tiaa Cref Lifestyle |
| State Farm Balanced |
Tiaa Cref and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiaa Cref and State Farm
The main advantage of trading using opposite Tiaa Cref and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa Cref 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.| Tiaa Cref vs. Great West Loomis Sayles | Tiaa Cref vs. Hennessy Nerstone Mid | Tiaa Cref vs. Boston Partners Small | Tiaa Cref vs. Fpa Queens Road |
| State Farm vs. Oaktree Diversifiedome | State Farm vs. Tiaa Cref Lifestyle Conservative | State Farm vs. Massmutual Premier Diversified | State Farm vs. Pioneer Diversified High |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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