Correlation Between Banco Do and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both Banco Do and Farmers Bancorp 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 Banco Do and Farmers Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Brasil and Farmers Bancorp, you can compare the effects of market volatilities on Banco Do and Farmers Bancorp 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 Banco Do with a short position of Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Farmers Bancorp.
Diversification Opportunities for Banco Do and Farmers Bancorp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Farmers is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp and Banco Do 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 Banco do Brasil are associated (or correlated) with Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Banco Do i.e., Banco Do and Farmers Bancorp go up and down completely randomly.
Pair Corralation between Banco Do and Farmers Bancorp
Assuming the 90 days trading horizon Banco Do is expected to generate 17.06 times less return on investment than Farmers Bancorp. But when comparing it to its historical volatility, Banco do Brasil is 1.02 times less risky than Farmers Bancorp. It trades about 0.02 of its potential returns per unit of risk. Farmers Bancorp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,425 in Farmers Bancorp on September 14, 2024 and sell it today you would earn a total of 375.00 from holding Farmers Bancorp or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Banco do Brasil vs. Farmers Bancorp
Performance |
| Timeline |
| Banco do Brasil |
| Farmers Bancorp |
Banco Do and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and Farmers Bancorp
The main advantage of trading using opposite Banco Do and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Farmers Bancorp 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 Bancorp will offset losses from the drop in Farmers Bancorp's long position.| Banco Do vs. Banco Bradesco SA | Banco Do vs. Petrleo Brasileiro SA | Banco Do vs. Ita Unibanco Holding | Banco Do vs. Itasa Investimentos |
| Farmers Bancorp vs. First Farmers Financial | Farmers Bancorp vs. Farmers Merchants Bancorp | Farmers Bancorp vs. Lakeland Financial | Farmers Bancorp vs. Eagle Financial Services |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |