Correlation Between Farmers Bank and BEO Bancorp
Can any of the company-specific risk be diversified away by investing in both Farmers Bank and BEO Bancorp 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 Bank and BEO Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Farmers Bank and BEO Bancorp, you can compare the effects of market volatilities on Farmers Bank and BEO Bancorp 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 Bank with a short position of BEO Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Bank and BEO Bancorp.
Diversification Opportunities for Farmers Bank and BEO Bancorp
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Farmers and BEO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Farmers Bank and BEO Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEO Bancorp and Farmers Bank 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 The Farmers Bank are associated (or correlated) with BEO Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEO Bancorp has no effect on the direction of Farmers Bank i.e., Farmers Bank and BEO Bancorp go up and down completely randomly.
Pair Corralation between Farmers Bank and BEO Bancorp
Given the investment horizon of 90 days Farmers Bank is expected to generate 2.84 times less return on investment than BEO Bancorp. But when comparing it to its historical volatility, The Farmers Bank is 5.84 times less risky than BEO Bancorp. It trades about 0.42 of its potential returns per unit of risk. BEO Bancorp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 7,696 in BEO Bancorp on November 1, 2024 and sell it today you would earn a total of 804.00 from holding BEO Bancorp or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Farmers Bank vs. BEO Bancorp
Performance |
| Timeline |
| Farmers Bank |
| BEO Bancorp |
Farmers Bank and BEO Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Bank and BEO Bancorp
The main advantage of trading using opposite Farmers Bank and BEO Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Bank position performs unexpectedly, BEO Bancorp 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 BEO Bancorp will offset losses from the drop in BEO Bancorp's long position.| Farmers Bank vs. CIB Marine Bancshares | Farmers Bank vs. F M Bank | Farmers Bank vs. ENB Financial Corp | Farmers Bank vs. First Bankers Trustshares |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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