Correlation Between Farmers Merchants and Better World
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Better World 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 Better World 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 Better World Acquisition, you can compare the effects of market volatilities on Farmers Merchants and Better World 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 Better World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Better World.
Diversification Opportunities for Farmers Merchants and Better World
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farmers and Better is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Better World Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better World Acquisition 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 Better World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better World Acquisition has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Better World go up and down completely randomly.
Pair Corralation between Farmers Merchants and Better World
If you would invest 104,100 in Farmers Merchants Bancorp on November 4, 2024 and sell it today you would lose (100.00) from holding Farmers Merchants Bancorp or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Better World Acquisition
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Better World Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farmers Merchants and Better World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Better World
The main advantage of trading using opposite Farmers Merchants and Better World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Better World 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 Better World will offset losses from the drop in Better World'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 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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