Correlation Between First Farmers and Lakeland Financial
Can any of the company-specific risk be diversified away by investing in both First Farmers and Lakeland 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 First Farmers and Lakeland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Farmers Financial and Lakeland Financial, you can compare the effects of market volatilities on First Farmers and Lakeland 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 First Farmers with a short position of Lakeland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Farmers and Lakeland Financial.
Diversification Opportunities for First Farmers and Lakeland Financial
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Lakeland is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Farmers Financial and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland 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 Financial are associated (or correlated) with Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of First Farmers i.e., First Farmers and Lakeland Financial go up and down completely randomly.
Pair Corralation between First Farmers and Lakeland Financial
Given the investment horizon of 90 days First Farmers Financial is expected to generate 0.42 times more return on investment than Lakeland Financial. However, First Farmers Financial is 2.4 times less risky than Lakeland Financial. It trades about 0.1 of its potential returns per unit of risk. Lakeland Financial is currently generating about -0.17 per unit of risk. If you would invest 6,600 in First Farmers Financial on November 28, 2024 and sell it today you would earn a total of 75.00 from holding First Farmers Financial or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Farmers Financial vs. Lakeland Financial
Performance |
| Timeline |
| First Farmers Financial |
| Lakeland Financial |
First Farmers and Lakeland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Farmers and Lakeland Financial
The main advantage of trading using opposite First Farmers and Lakeland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Farmers position performs unexpectedly, Lakeland 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 Lakeland Financial will offset losses from the drop in Lakeland Financial's long position.| First Farmers vs. Farmers Bancorp | First Farmers vs. Farmers Merchants Bancorp | First Farmers vs. Lakeland Financial | First Farmers vs. FFW Corporation |
| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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