Correlation Between Ab Bond and State Farm
Can any of the company-specific risk be diversified away by investing in both Ab Bond 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 Ab Bond and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and State Farm Growth, you can compare the effects of market volatilities on Ab Bond 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 Ab Bond with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and State Farm.
Diversification Opportunities for Ab Bond and State Farm
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABNYX and State is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and State Farm Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Growth and Ab Bond 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 Ab Bond Inflation 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 Growth has no effect on the direction of Ab Bond i.e., Ab Bond and State Farm go up and down completely randomly.
Pair Corralation between Ab Bond and State Farm
Assuming the 90 days horizon Ab Bond is expected to generate 1.88 times less return on investment than State Farm. But when comparing it to its historical volatility, Ab Bond Inflation is 4.31 times less risky than State Farm. It trades about 0.08 of its potential returns per unit of risk. State Farm Growth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,808 in State Farm Growth on October 5, 2024 and sell it today you would earn a total of 946.00 from holding State Farm Growth or generate 8.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ab Bond Inflation vs. State Farm Growth
Performance |
Timeline |
Ab Bond Inflation |
State Farm Growth |
Ab Bond and State Farm Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Bond and State Farm
The main advantage of trading using opposite Ab Bond and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond 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.Ab Bond vs. The Gold Bullion | Ab Bond vs. Oppenheimer Gold Special | Ab Bond vs. Fidelity Advisor Gold | Ab Bond vs. Goldman Sachs Clean |
State Farm vs. Icon Financial Fund | State Farm vs. Transamerica Financial Life | State Farm vs. Goldman Sachs Financial | State Farm vs. Prudential Jennison Financial |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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