Correlation Between Vanguard 500 and State Farm
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 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 Vanguard 500 and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and State Farm Growth, you can compare the effects of market volatilities on Vanguard 500 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 Vanguard 500 with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and State Farm.
Diversification Opportunities for Vanguard 500 and State Farm
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and State is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index 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 Vanguard 500 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 Vanguard 500 Index 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 Vanguard 500 i.e., Vanguard 500 and State Farm go up and down completely randomly.
Pair Corralation between Vanguard 500 and State Farm
Assuming the 90 days horizon Vanguard 500 Index is expected to under-perform the State Farm. In addition to that, Vanguard 500 is 1.18 times more volatile than State Farm Growth. It trades about -0.06 of its total potential returns per unit of risk. State Farm Growth is currently generating about -0.05 per unit of volatility. If you would invest 11,832 in State Farm Growth on December 28, 2024 and sell it today you would lose (327.00) from holding State Farm Growth or give up 2.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.36% |
Values | Daily Returns |
Vanguard 500 Index vs. State Farm Growth
Performance |
Timeline |
Vanguard 500 Index |
State Farm Growth |
Vanguard 500 and State Farm Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard 500 and State Farm
The main advantage of trading using opposite Vanguard 500 and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 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.Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
State Farm vs. Virtus High Yield | State Farm vs. Legg Mason Partners | State Farm vs. American Century High | State Farm vs. Metropolitan West 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |