Correlation Between Farmers Merchants and Beiersdorf Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Beiersdorf Aktiengesellscha 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 Beiersdorf Aktiengesellscha 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 Beiersdorf Aktiengesellschaft, you can compare the effects of market volatilities on Farmers Merchants and Beiersdorf Aktiengesellscha 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 Beiersdorf Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Beiersdorf Aktiengesellscha.
Diversification Opportunities for Farmers Merchants and Beiersdorf Aktiengesellscha
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farmers and Beiersdorf is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Beiersdorf Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beiersdorf Aktiengesellscha 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 Beiersdorf Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beiersdorf Aktiengesellscha has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Beiersdorf Aktiengesellscha go up and down completely randomly.
Pair Corralation between Farmers Merchants and Beiersdorf Aktiengesellscha
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 1.17 times more return on investment than Beiersdorf Aktiengesellscha. However, Farmers Merchants is 1.17 times more volatile than Beiersdorf Aktiengesellschaft. It trades about 0.05 of its potential returns per unit of risk. Beiersdorf Aktiengesellschaft is currently generating about -0.06 per unit of risk. If you would invest 94,350 in Farmers Merchants Bancorp on September 4, 2024 and sell it today you would earn a total of 14,600 from holding Farmers Merchants Bancorp or generate 15.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.35% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Beiersdorf Aktiengesellschaft
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Beiersdorf Aktiengesellscha |
Farmers Merchants and Beiersdorf Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Beiersdorf Aktiengesellscha
The main advantage of trading using opposite Farmers Merchants and Beiersdorf Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Beiersdorf Aktiengesellscha 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 Beiersdorf Aktiengesellscha will offset losses from the drop in Beiersdorf Aktiengesellscha's long position.| Farmers Merchants vs. Western Asset Global | Farmers Merchants vs. Invesco Trust For | Farmers Merchants vs. Logan Ridge Finance | Farmers Merchants vs. Invesco Advantage MIT |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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