Correlation Between Vy Columbia and State Farm

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

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

Diversification Opportunities for Vy Columbia and State Farm

-0.53

Correlation Coefficient

Vy Columbia  State Farm

Excellent diversification

The 3 months correlation between VYRDX and State is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vy Columbia Small and State Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm International and Vy Columbia 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 Vy Columbia Small 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 International has no effect on the direction of Vy Columbia i.e., Vy Columbia and State Farm go up and down completely randomly.

Pair Corralation between Vy Columbia and State Farm

Assuming the 90 days horizon Vy Columbia Small is expected to generate 3.69 times more return on investment than State Farm. However, Vy Columbia is 3.69 times more volatile than State Farm International. It trades about 0.12 of its potential returns per unit of risk. State Farm International is currently generating about -0.11 per unit of risk. If you would invest  1,654  in Vy Columbia Small on September 14, 2024 and sell it today you would earn a total of  143.00  from holding Vy Columbia Small or generate 8.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Vy Columbia Small  vs.  State Farm International

Vy Columbia Small

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vy Columbia Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vy Columbia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

State Farm International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Farm International 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.

Pair Trading with Vy Columbia and State Farm

The main advantage of trading using opposite Vy Columbia and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vy Columbia 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 Vy Columbia Small and State Farm International 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.