Correlation Between Farmers Merchants and BioAdaptives
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and BioAdaptives 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 BioAdaptives 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 BioAdaptives, you can compare the effects of market volatilities on Farmers Merchants and BioAdaptives 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 BioAdaptives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and BioAdaptives.
Diversification Opportunities for Farmers Merchants and BioAdaptives
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Farmers and BioAdaptives is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and BioAdaptives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioAdaptives 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 BioAdaptives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioAdaptives has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and BioAdaptives go up and down completely randomly.
Pair Corralation between Farmers Merchants and BioAdaptives
Given the investment horizon of 90 days Farmers Merchants is expected to generate 137.6 times less return on investment than BioAdaptives. But when comparing it to its historical volatility, Farmers Merchants Bancorp is 82.24 times less risky than BioAdaptives. It trades about 0.09 of its potential returns per unit of risk. BioAdaptives is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.08 in BioAdaptives on August 30, 2024 and sell it today you would earn a total of 9.92 from holding BioAdaptives or generate 12400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. BioAdaptives
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| BioAdaptives |
Farmers Merchants and BioAdaptives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and BioAdaptives
The main advantage of trading using opposite Farmers Merchants and BioAdaptives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, BioAdaptives 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 BioAdaptives will offset losses from the drop in BioAdaptives' long position.| Farmers Merchants vs. PSB Holdings | Farmers Merchants vs. National Capital Bank | Farmers Merchants vs. Community Heritage Financial | Farmers Merchants vs. Citizens Financial Corp |
| BioAdaptives vs. Nates Food Co | BioAdaptives vs. Qed Connect | BioAdaptives vs. Branded Legacy | BioAdaptives vs. Grand Havana |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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