Correlation Between Counterpoint Tactical and State Farm

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Can any of the company-specific risk be diversified away by investing in both Counterpoint Tactical 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 Counterpoint Tactical and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Counterpoint Tactical Municipal and State Farm Interim, you can compare the effects of market volatilities on Counterpoint Tactical 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 Counterpoint Tactical with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Counterpoint Tactical and State Farm.

Diversification Opportunities for Counterpoint Tactical and State Farm

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Counterpoint and State is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Counterpoint Tactical Municipa 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 Counterpoint Tactical 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 Counterpoint Tactical Municipal 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 Counterpoint Tactical i.e., Counterpoint Tactical and State Farm go up and down completely randomly.

Pair Corralation between Counterpoint Tactical and State Farm

Assuming the 90 days horizon Counterpoint Tactical Municipal is expected to generate 1.23 times more return on investment than State Farm. However, Counterpoint Tactical is 1.23 times more volatile than State Farm Interim. It trades about 0.38 of its potential returns per unit of risk. State Farm Interim is currently generating about 0.09 per unit of risk. If you would invest  1,091  in Counterpoint Tactical Municipal on September 14, 2024 and sell it today you would earn a total of  12.00  from holding Counterpoint Tactical Municipal or generate 1.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Counterpoint Tactical Municipa  vs.  State Farm Interim

 Performance 
       Timeline  
Counterpoint Tactical 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Counterpoint Tactical Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Counterpoint Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
State Farm Interim 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days State Farm Interim has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, State Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Counterpoint Tactical and State Farm Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Counterpoint Tactical and State Farm

The main advantage of trading using opposite Counterpoint Tactical and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Counterpoint Tactical 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.
The idea behind Counterpoint Tactical Municipal and State Farm Interim pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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