Correlation Between Southern California and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both Southern California and Farmers Bank 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 Southern California and Farmers Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Bancorp and The Farmers Bank, you can compare the effects of market volatilities on Southern California and Farmers Bank 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 Southern California with a short position of Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Farmers Bank.
Diversification Opportunities for Southern California and Farmers Bank
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southern and Farmers is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Bancorp and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank and Southern California 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 Southern California Bancorp are associated (or correlated) with Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of Southern California i.e., Southern California and Farmers Bank go up and down completely randomly.
Pair Corralation between Southern California and Farmers Bank
Given the investment horizon of 90 days Southern California Bancorp is expected to generate 2.76 times more return on investment than Farmers Bank. However, Southern California is 2.76 times more volatile than The Farmers Bank. It trades about 0.4 of its potential returns per unit of risk. The Farmers Bank is currently generating about -0.09 per unit of risk. If you would invest 1,458 in Southern California Bancorp on September 1, 2024 and sell it today you would earn a total of 334.00 from holding Southern California Bancorp or generate 22.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern California Bancorp vs. The Farmers Bank
Performance |
| Timeline |
| Southern California |
| Farmers Bank |
Southern California and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and Farmers Bank
The main advantage of trading using opposite Southern California and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California position performs unexpectedly, Farmers Bank 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 Bank will offset losses from the drop in Farmers Bank's long position.| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
| Farmers Bank vs. Piraeus Bank SA | Farmers Bank vs. Turkiye Garanti Bankasi | Farmers Bank vs. Delhi Bank Corp | Farmers Bank vs. Uwharrie Capital Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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