Correlation Between First Financial and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both First Financial and Farmers Bank 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 Financial and Farmers Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Northwest and The Farmers Bank, you can compare the effects of market volatilities on First Financial and Farmers Bank 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 Financial with a short position of Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Farmers Bank.
Diversification Opportunities for First Financial and Farmers Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Farmers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank and First Financial 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 Financial Northwest are associated (or correlated) with Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of First Financial i.e., First Financial and Farmers Bank go up and down completely randomly.
Pair Corralation between First Financial and Farmers Bank
Given the investment horizon of 90 days First Financial Northwest is expected to generate 1.12 times more return on investment than Farmers Bank. However, First Financial is 1.12 times more volatile than The Farmers Bank. It trades about 0.11 of its potential returns per unit of risk. The Farmers Bank is currently generating about -0.07 per unit of risk. If you would invest 2,211 in First Financial Northwest on September 3, 2024 and sell it today you would earn a total of 49.00 from holding First Financial Northwest or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Northwest vs. The Farmers Bank
Performance |
| Timeline |
| First Financial Northwest |
| Farmers Bank |
First Financial and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Farmers Bank
The main advantage of trading using opposite First Financial and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Farmers Bank 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 Farmers Bank will offset losses from the drop in Farmers Bank's long position.| First Financial vs. JPMorgan Chase Co | First Financial vs. Citigroup | First Financial vs. Wells Fargo | First Financial vs. Toronto Dominion Bank |
| Farmers Bank vs. CIB Marine Bancshares | Farmers Bank vs. F M Bank | Farmers Bank vs. ENB Financial Corp | Farmers Bank vs. First Bankers Trustshares |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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