Correlation Between First Farmers and First State
Can any of the company-specific risk be diversified away by investing in both First Farmers and First State 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 First Farmers and First State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Farmers and and First State Financial, you can compare the effects of market volatilities on First Farmers and First State 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 First Farmers with a short position of First State. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Farmers and First State.
Diversification Opportunities for First Farmers and First State
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and First is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Farmers and and First State Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First State Financial and First Farmers 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 First Farmers and are associated (or correlated) with First State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First State Financial has no effect on the direction of First Farmers i.e., First Farmers and First State go up and down completely randomly.
Pair Corralation between First Farmers and First State
Given the investment horizon of 90 days First Farmers is expected to generate 2.7 times less return on investment than First State. But when comparing it to its historical volatility, First Farmers and is 29.15 times less risky than First State. It trades about 0.33 of its potential returns per unit of risk. First State Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.69 in First State Financial on November 20, 2025 and sell it today you would lose (1.74) from holding First State Financial or give up 47.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
First Farmers and vs. First State Financial
Performance |
| Timeline |
| First Farmers |
| First State Financial |
First Farmers and First State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Farmers and First State
The main advantage of trading using opposite First Farmers and First State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Farmers position performs unexpectedly, First State 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 State will offset losses from the drop in First State's long position.| First Farmers vs. TISCO Financial Group | First Farmers vs. Merchants Financial Group | First Farmers vs. FS Bancorp | First Farmers vs. CCFNB Bancorp |
| First State vs. First Republic Bank | First State vs. BioCube | First State vs. Trend Exploration I | First State vs. Eastern Goldfields |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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