Correlation Between Farmers Merchants and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Aozora 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 Farmers Merchants and Aozora Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers Merchants Bancorp and Aozora Bank, you can compare the effects of market volatilities on Farmers Merchants and Aozora 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 Farmers Merchants with a short position of Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Aozora Bank.
Diversification Opportunities for Farmers Merchants and Aozora Bank
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmers and Aozora is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank and Farmers Merchants 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 Farmers Merchants Bancorp are associated (or correlated) with Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Aozora Bank go up and down completely randomly.
Pair Corralation between Farmers Merchants and Aozora Bank
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.32 times more return on investment than Aozora Bank. However, Farmers Merchants Bancorp is 3.08 times less risky than Aozora Bank. It trades about 0.03 of its potential returns per unit of risk. Aozora Bank is currently generating about -0.21 per unit of risk. If you would invest 2,512 in Farmers Merchants Bancorp on September 3, 2024 and sell it today you would earn a total of 808.00 from holding Farmers Merchants Bancorp or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.63% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Aozora Bank
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Aozora Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farmers Merchants and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Aozora Bank
The main advantage of trading using opposite Farmers Merchants and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Aozora 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| Farmers Merchants vs. JPMorgan Chase Co | Farmers Merchants vs. Citigroup | Farmers Merchants vs. Wells Fargo | Farmers Merchants vs. Toronto Dominion Bank |
| Aozora Bank vs. Tower One Wireless | Aozora Bank vs. JBG SMITH Properties | Aozora Bank vs. Eastern Co | Aozora Bank vs. Western Acquisition Ventures |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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