Correlation Between Bank Utica and Farmers National
Can any of the company-specific risk be diversified away by investing in both Bank Utica and Farmers National 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 Bank Utica and Farmers National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Utica Ny and Farmers National Banc, you can compare the effects of market volatilities on Bank Utica and Farmers National 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 Bank Utica with a short position of Farmers National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Utica and Farmers National.
Diversification Opportunities for Bank Utica and Farmers National
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Farmers is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bank Utica Ny and Farmers National Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers National Banc and Bank Utica 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 Bank Utica Ny are associated (or correlated) with Farmers National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers National Banc has no effect on the direction of Bank Utica i.e., Bank Utica and Farmers National go up and down completely randomly.
Pair Corralation between Bank Utica and Farmers National
Assuming the 90 days horizon Bank Utica is expected to generate 1.45 times less return on investment than Farmers National. But when comparing it to its historical volatility, Bank Utica Ny is 1.79 times less risky than Farmers National. It trades about 0.21 of its potential returns per unit of risk. Farmers National Banc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,411 in Farmers National Banc on August 29, 2024 and sell it today you would earn a total of 167.00 from holding Farmers National Banc or generate 11.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Utica Ny vs. Farmers National Banc
Performance |
| Timeline |
| Bank Utica Ny |
| Farmers National Banc |
Bank Utica and Farmers National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Utica and Farmers National
The main advantage of trading using opposite Bank Utica and Farmers National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Utica position performs unexpectedly, Farmers National 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 National will offset losses from the drop in Farmers National's long position.The idea behind Bank Utica Ny and Farmers National Banc 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.| Farmers National vs. Fifth Third Bancorp | Farmers National vs. Huntington Bancshares Incorporated | Farmers National vs. MT Bank |
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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