Correlation Between FFW and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both FFW and Farmers 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 FFW and Farmers Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FFW Corporation and Farmers Bancorp, you can compare the effects of market volatilities on FFW and Farmers 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 FFW with a short position of Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FFW and Farmers Bancorp.
Diversification Opportunities for FFW and Farmers Bancorp
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between FFW and Farmers is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding FFW Corp. and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp and FFW 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 FFW Corporation are associated (or correlated) with Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of FFW i.e., FFW and Farmers Bancorp go up and down completely randomly.
Pair Corralation between FFW and Farmers Bancorp
Given the investment horizon of 90 days FFW Corporation is expected to under-perform the Farmers Bancorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, FFW Corporation is 1.57 times less risky than Farmers Bancorp. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Farmers Bancorp is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 3,300 in Farmers Bancorp on September 2, 2024 and sell it today you would earn a total of 250.00 from holding Farmers Bancorp or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FFW Corp. vs. Farmers Bancorp
Performance |
| Timeline |
| FFW Corporation |
| Farmers Bancorp |
FFW and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FFW and Farmers Bancorp
The main advantage of trading using opposite FFW and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FFW position performs unexpectedly, Farmers 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 Farmers Bancorp will offset losses from the drop in Farmers Bancorp's long position.| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle Financial Services |
| Farmers Bancorp vs. First Farmers Financial | Farmers Bancorp vs. Farmers Merchants Bancorp | Farmers Bancorp vs. Lakeland Financial | Farmers Bancorp vs. Eagle Financial Services |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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