Correlation Between Farmers Bank and First Financial
Can any of the company-specific risk be diversified away by investing in both Farmers Bank and First Financial 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 First Financial 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 First Financial Northwest, you can compare the effects of market volatilities on Farmers Bank and First Financial 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 First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Bank and First Financial.
Diversification Opportunities for Farmers Bank and First Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Farmers and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Farmers Bank and First Financial Northwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Northwest 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 First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Northwest has no effect on the direction of Farmers Bank i.e., Farmers Bank and First Financial go up and down completely randomly.
Pair Corralation between Farmers Bank and First Financial
Given the investment horizon of 90 days The Farmers Bank is expected to under-perform the First Financial. But the otc stock apears to be less risky and, when comparing its historical volatility, The Farmers Bank is 1.04 times less risky than First Financial. The otc stock trades about 0.0 of its potential returns per unit of risk. The First Financial Northwest is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,362 in First Financial Northwest on September 3, 2024 and sell it today you would earn a total of 898.00 from holding First Financial Northwest or generate 65.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 76.57% |
| Values | Daily Returns |
The Farmers Bank vs. First Financial Northwest
Performance |
| Timeline |
| Farmers Bank |
| First Financial Northwest |
Farmers Bank and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Bank and First Financial
The main advantage of trading using opposite Farmers Bank and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Bank position performs unexpectedly, First Financial 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 First Financial will offset losses from the drop in First Financial'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 |
| First Financial vs. JPMorgan Chase Co | First Financial vs. Citigroup | First Financial vs. Wells Fargo | First Financial vs. Toronto Dominion 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 Stocks Directory module to find actively traded stocks across global markets.
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