Correlation Between F M and Grand River
Can any of the company-specific risk be diversified away by investing in both F M and Grand River 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 F M and Grand River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between F M Bank and Grand River Commerce, you can compare the effects of market volatilities on F M and Grand River 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 F M with a short position of Grand River. Check out your portfolio center. Please also check ongoing floating volatility patterns of F M and Grand River.
Diversification Opportunities for F M and Grand River
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FMBM and Grand is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding F M Bank and Grand River Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand River Commerce and F M 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 F M Bank are associated (or correlated) with Grand River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand River Commerce has no effect on the direction of F M i.e., F M and Grand River go up and down completely randomly.
Pair Corralation between F M and Grand River
Given the investment horizon of 90 days F M Bank is expected to under-perform the Grand River. But the otc stock apears to be less risky and, when comparing its historical volatility, F M Bank is 3.17 times less risky than Grand River. The otc stock trades about -0.3 of its potential returns per unit of risk. The Grand River Commerce is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 303.00 in Grand River Commerce on August 25, 2024 and sell it today you would lose (13.00) from holding Grand River Commerce or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
F M Bank vs. Grand River Commerce
Performance |
| Timeline |
| F M Bank |
| Grand River Commerce |
F M and Grand River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with F M and Grand River
The main advantage of trading using opposite F M and Grand River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F M position performs unexpectedly, Grand River 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 Grand River will offset losses from the drop in Grand River's long position.| F M vs. Invesco High Income | F M vs. Blackrock Muniholdings Ny | F M vs. MFS Investment Grade | F M vs. Federated Premier Municipal |
| Grand River vs. Standard Bank Group | Grand River vs. PSB Holdings | Grand River vs. United Overseas Bank | Grand River vs. Turkiye Garanti Bankasi |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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