Correlation Between Community Bankers and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both Community Bankers 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 Community Bankers and Farmers Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Bankers and The Farmers Bank, you can compare the effects of market volatilities on Community Bankers 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 Community Bankers with a short position of Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Bankers and Farmers Bank.
Diversification Opportunities for Community Bankers and Farmers Bank
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Community and Farmers is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Community Bankers and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank and Community Bankers 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 Community Bankers 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 Community Bankers i.e., Community Bankers and Farmers Bank go up and down completely randomly.
Pair Corralation between Community Bankers and Farmers Bank
Given the investment horizon of 90 days Community Bankers is expected to under-perform the Farmers Bank. In addition to that, Community Bankers is 1.23 times more volatile than The Farmers Bank. It trades about -0.02 of its total potential returns per unit of risk. The Farmers Bank is currently generating about -0.01 per unit of volatility. If you would invest 2,651 in The Farmers Bank on August 25, 2024 and sell it today you would lose (464.00) from holding The Farmers Bank or give up 17.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.72% |
| Values | Daily Returns |
Community Bankers vs. The Farmers Bank
Performance |
| Timeline |
| Community Bankers |
| Farmers Bank |
Community Bankers and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Bankers and Farmers Bank
The main advantage of trading using opposite Community Bankers and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bankers 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.| Community Bankers vs. The Farmers Bank | Community Bankers vs. CCSB Financial Corp | Community Bankers vs. Bank of Utica | Community Bankers vs. Delhi Bank Corp |
| Farmers Bank vs. CIB Marine Bancshares | Farmers Bank vs. F M Bank | Farmers Bank vs. ENB Financial Corp | Farmers Bank vs. First Bankers Trustshares |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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