Correlation Between First National and Farmers
Can any of the company-specific risk be diversified away by investing in both First National and Farmers 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 National and Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National of and Farmers And Merchants, you can compare the effects of market volatilities on First National and Farmers 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 National with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Farmers.
Diversification Opportunities for First National and Farmers
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Farmers is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First National of and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and First National 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 National of are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of First National i.e., First National and Farmers go up and down completely randomly.
Pair Corralation between First National and Farmers
Given the investment horizon of 90 days First National is expected to generate 2.04 times less return on investment than Farmers. In addition to that, First National is 1.69 times more volatile than Farmers And Merchants. It trades about 0.07 of its total potential returns per unit of risk. Farmers And Merchants is currently generating about 0.25 per unit of volatility. If you would invest 545,000 in Farmers And Merchants on August 28, 2024 and sell it today you would earn a total of 20,000 from holding Farmers And Merchants or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National of vs. Farmers And Merchants
Performance |
| Timeline |
| First National |
| Farmers And Merchants |
First National and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Farmers
The main advantage of trading using opposite First National and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Farmers 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 will offset losses from the drop in Farmers' long position.| First National vs. Washington Business Bank | First National vs. National Capital Bank | First National vs. Community Heritage Financial | First National vs. Citizens Financial Corp |
| Farmers vs. First National Bank | Farmers vs. Farmers Merchants Bancorp | Farmers vs. Exchange Bank | Farmers vs. First National of |
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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