Correlation Between Absa Group and Farmers Merchants
Can any of the company-specific risk be diversified away by investing in both Absa Group and Farmers Merchants 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 Absa Group and Farmers Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and Farmers Merchants Bancorp, you can compare the effects of market volatilities on Absa Group and Farmers Merchants 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 Absa Group with a short position of Farmers Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and Farmers Merchants.
Diversification Opportunities for Absa Group and Farmers Merchants
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Absa and Farmers is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and Farmers Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Merchants Bancorp and Absa Group 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 Absa Group Limited are associated (or correlated) with Farmers Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Merchants Bancorp has no effect on the direction of Absa Group i.e., Absa Group and Farmers Merchants go up and down completely randomly.
Pair Corralation between Absa Group and Farmers Merchants
If you would invest 2,755 in Farmers Merchants Bancorp on September 2, 2024 and sell it today you would earn a total of 597.00 from holding Farmers Merchants Bancorp or generate 21.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. Farmers Merchants Bancorp
Performance |
| Timeline |
| Absa Group Limited |
| Farmers Merchants Bancorp |
Absa Group and Farmers Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and Farmers Merchants
The main advantage of trading using opposite Absa Group and Farmers Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, Farmers Merchants 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 Farmers Merchants will offset losses from the drop in Farmers Merchants' long position.| Absa Group vs. Piraeus Bank SA | Absa Group vs. Turkiye Garanti Bankasi | Absa Group vs. Uwharrie Capital Corp |
| Farmers Merchants vs. Home Federal Bancorp | Farmers Merchants vs. First Financial Northwest | Farmers Merchants vs. First Northwest Bancorp | Farmers Merchants vs. First Capital |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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