Correlation Between Farmers Merchants and Altura Energy
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Altura Energy 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 Altura Energy 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 Altura Energy, you can compare the effects of market volatilities on Farmers Merchants and Altura Energy 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 Altura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Altura Energy.
Diversification Opportunities for Farmers Merchants and Altura Energy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Farmers and Altura is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Altura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Energy 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 Altura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Energy has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Altura Energy go up and down completely randomly.
Pair Corralation between Farmers Merchants and Altura Energy
Given the investment horizon of 90 days Farmers Merchants is expected to generate 8.71 times less return on investment than Altura Energy. But when comparing it to its historical volatility, Farmers Merchants Bancorp is 2.97 times less risky than Altura Energy. It trades about 0.04 of its potential returns per unit of risk. Altura Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 324.00 in Altura Energy on September 1, 2024 and sell it today you would earn a total of 703.00 from holding Altura Energy or generate 216.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.31% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Altura Energy
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Altura Energy |
Farmers Merchants and Altura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Altura Energy
The main advantage of trading using opposite Farmers Merchants and Altura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Altura Energy 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 Altura Energy will offset losses from the drop in Altura Energy's long position.| Farmers Merchants vs. PSB Holdings | Farmers Merchants vs. Eagle Financial Services | Farmers Merchants vs. National Capital Bank | Farmers Merchants vs. Community Heritage Financial |
| Altura Energy vs. AER Energy Resources | Altura Energy vs. Alamo Energy Corp | Altura Energy vs. Arete Industries | Altura Energy vs. Barrister Energy LLC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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