Correlation Between BEO Bancorp and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both BEO Bancorp 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 BEO Bancorp and Farmers Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BEO Bancorp and The Farmers Bank, you can compare the effects of market volatilities on BEO Bancorp 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 BEO Bancorp with a short position of Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEO Bancorp and Farmers Bank.
Diversification Opportunities for BEO Bancorp and Farmers Bank
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BEO and Farmers is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BEO 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 BEO Bancorp 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 BEO 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 BEO Bancorp i.e., BEO Bancorp and Farmers Bank go up and down completely randomly.
Pair Corralation between BEO Bancorp and Farmers Bank
Given the investment horizon of 90 days BEO Bancorp is expected to generate 0.76 times more return on investment than Farmers Bank. However, BEO Bancorp is 1.32 times less risky than Farmers Bank. It trades about 0.08 of its potential returns per unit of risk. The Farmers Bank is currently generating about 0.0 per unit of risk. If you would invest 4,109 in BEO Bancorp on August 29, 2024 and sell it today you would earn a total of 3,486 from holding BEO Bancorp or generate 84.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.13% |
| Values | Daily Returns |
BEO Bancorp vs. The Farmers Bank
Performance |
| Timeline |
| BEO Bancorp |
| Farmers Bank |
BEO Bancorp and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BEO Bancorp and Farmers Bank
The main advantage of trading using opposite BEO Bancorp and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEO Bancorp 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.| BEO Bancorp vs. CCSB Financial Corp | BEO Bancorp vs. Delhi Bank Corp | BEO Bancorp vs. First Community Financial | BEO Bancorp vs. First Community |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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