Correlation Between State Farm and Fidelity Otc

Can any of the company-specific risk be diversified away by investing in both State Farm and Fidelity Otc 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 State Farm and Fidelity Otc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between State Farm Growth and Fidelity Otc Portfolio, you can compare the effects of market volatilities on State Farm and Fidelity Otc 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 State Farm with a short position of Fidelity Otc. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Farm and Fidelity Otc.

Diversification Opportunities for State Farm and Fidelity Otc

0.96

Correlation Coefficient

State Farm  Fidelity Otc

Almost no diversification

The 3 months correlation between State and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding State Farm Growth and Fidelity Otc Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Otc Portfolio and State Farm 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 State Farm Growth are associated (or correlated) with Fidelity Otc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Otc Portfolio has no effect on the direction of State Farm i.e., State Farm and Fidelity Otc go up and down completely randomly.

Pair Corralation between State Farm and Fidelity Otc

Assuming the 90 days horizon State Farm Growth is expected to under-perform the Fidelity Otc. But the mutual fund apears to be less risky and, when comparing its historical volatility, State Farm Growth is 1.64 times less risky than Fidelity Otc. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Fidelity Otc Portfolio is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,069  in Fidelity Otc Portfolio on January 28, 2024 and sell it today you would lose (30.00) from holding Fidelity Otc Portfolio or give up 1.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

State Farm Growth  vs.  Fidelity Otc Portfolio

State Farm Growth

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in State Farm Growth are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, State Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Otc Portfolio

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Otc Portfolio are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Otc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with State Farm and Fidelity Otc

The main advantage of trading using opposite State Farm and Fidelity Otc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Farm position performs unexpectedly, Fidelity Otc 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 Fidelity Otc will offset losses from the drop in Fidelity Otc's long position.

The idea behind State Farm Growth and Fidelity Otc Portfolio 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.