Correlation Between Farmers and Commerzbank
Can any of the company-specific risk be diversified away by investing in both Farmers and Commerzbank 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 and Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers And Merchants and Commerzbank AG PK, you can compare the effects of market volatilities on Farmers and Commerzbank 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 with a short position of Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers and Commerzbank.
Diversification Opportunities for Farmers and Commerzbank
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farmers and Commerzbank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Farmers And Merchants and Commerzbank AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG PK and 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 Farmers And Merchants are associated (or correlated) with Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG PK has no effect on the direction of Farmers i.e., Farmers and Commerzbank go up and down completely randomly.
Pair Corralation between Farmers and Commerzbank
Given the investment horizon of 90 days Farmers And Merchants is expected to under-perform the Commerzbank. But the otc stock apears to be less risky and, when comparing its historical volatility, Farmers And Merchants is 1.58 times less risky than Commerzbank. The otc stock trades about -0.02 of its potential returns per unit of risk. The Commerzbank AG PK is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,035 in Commerzbank AG PK on August 27, 2024 and sell it today you would earn a total of 558.00 from holding Commerzbank AG PK or generate 53.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.9% |
| Values | Daily Returns |
Farmers And Merchants vs. Commerzbank AG PK
Performance |
| Timeline |
| Farmers And Merchants |
| Commerzbank AG PK |
Farmers and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers and Commerzbank
The main advantage of trading using opposite Farmers and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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