Correlation Between Farmers Merchants and Bridgetown Holdings
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Bridgetown Holdings 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 Bridgetown Holdings 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 Bridgetown Holdings, you can compare the effects of market volatilities on Farmers Merchants and Bridgetown Holdings 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 Bridgetown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Bridgetown Holdings.
Diversification Opportunities for Farmers Merchants and Bridgetown Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farmers and Bridgetown is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Bridgetown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgetown Holdings 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 Bridgetown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgetown Holdings has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Bridgetown Holdings go up and down completely randomly.
Pair Corralation between Farmers Merchants and Bridgetown Holdings
Given the investment horizon of 90 days Farmers Merchants is expected to generate 1.02 times less return on investment than Bridgetown Holdings. In addition to that, Farmers Merchants is 14.23 times more volatile than Bridgetown Holdings. It trades about 0.01 of its total potential returns per unit of risk. Bridgetown Holdings is currently generating about 0.21 per unit of volatility. If you would invest 1,000.00 in Bridgetown Holdings on October 25, 2024 and sell it today you would earn a total of 30.00 from holding Bridgetown Holdings or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 25.27% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Bridgetown Holdings
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Bridgetown Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farmers Merchants and Bridgetown Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Bridgetown Holdings
The main advantage of trading using opposite Farmers Merchants and Bridgetown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Bridgetown Holdings 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 Bridgetown Holdings will offset losses from the drop in Bridgetown Holdings' 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 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |