Correlation Between Farmers Bancorp and Santa Cruz
Can any of the company-specific risk be diversified away by investing in both Farmers Bancorp and Santa Cruz 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 Farmers Bancorp and Santa Cruz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers Bancorp and Santa Cruz County, you can compare the effects of market volatilities on Farmers Bancorp and Santa Cruz 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 Farmers Bancorp with a short position of Santa Cruz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Bancorp and Santa Cruz.
Diversification Opportunities for Farmers Bancorp and Santa Cruz
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Farmers and Santa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Bancorp and Santa Cruz County in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santa Cruz County and Farmers 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 Farmers Bancorp are associated (or correlated) with Santa Cruz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santa Cruz County has no effect on the direction of Farmers Bancorp i.e., Farmers Bancorp and Santa Cruz go up and down completely randomly.
Pair Corralation between Farmers Bancorp and Santa Cruz
Given the investment horizon of 90 days Farmers Bancorp is expected to generate 6.51 times more return on investment than Santa Cruz. However, Farmers Bancorp is 6.51 times more volatile than Santa Cruz County. It trades about 0.25 of its potential returns per unit of risk. Santa Cruz County is currently generating about 0.15 per unit of risk. If you would invest 3,550 in Farmers Bancorp on September 25, 2024 and sell it today you would earn a total of 298.00 from holding Farmers Bancorp or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Farmers Bancorp vs. Santa Cruz County
Performance |
| Timeline |
| Farmers Bancorp |
| Santa Cruz County |
Farmers Bancorp and Santa Cruz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Bancorp and Santa Cruz
The main advantage of trading using opposite Farmers Bancorp and Santa Cruz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Bancorp position performs unexpectedly, Santa Cruz 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 Santa Cruz will offset losses from the drop in Santa Cruz's long position.| Farmers Bancorp vs. Banco Bradesco SA | Farmers Bancorp vs. Itau Unibanco Banco | Farmers Bancorp vs. Lloyds Banking Group | Farmers Bancorp vs. Deutsche Bank AG |
| Santa Cruz vs. Citizens Financial Corp | Santa Cruz vs. Farmers Bancorp | Santa Cruz vs. Alpine Banks of | Santa Cruz vs. Taylor Calvin B |
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 CEOs Directory module to screen CEOs from public companies around the world.
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