Correlation Between Farmers Merchants and Headwater Exploration
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Headwater Exploration 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 Headwater Exploration 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 Headwater Exploration, you can compare the effects of market volatilities on Farmers Merchants and Headwater Exploration 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 Headwater Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Headwater Exploration.
Diversification Opportunities for Farmers Merchants and Headwater Exploration
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farmers and Headwater is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Headwater Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Exploration 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 Headwater Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Exploration has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Headwater Exploration go up and down completely randomly.
Pair Corralation between Farmers Merchants and Headwater Exploration
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.74 times more return on investment than Headwater Exploration. However, Farmers Merchants Bancorp is 1.35 times less risky than Headwater Exploration. It trades about -0.01 of its potential returns per unit of risk. Headwater Exploration is currently generating about -0.08 per unit of risk. If you would invest 103,500 in Farmers Merchants Bancorp on November 27, 2024 and sell it today you would lose (500.00) from holding Farmers Merchants Bancorp or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Headwater Exploration
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Headwater Exploration |
Farmers Merchants and Headwater Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Headwater Exploration
The main advantage of trading using opposite Farmers Merchants and Headwater Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Headwater Exploration 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 Headwater Exploration will offset losses from the drop in Headwater Exploration'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 |
| Headwater Exploration vs. ROK Resources | Headwater Exploration vs. Pieridae Energy Limited | Headwater Exploration vs. Kelt Exploration | Headwater Exploration vs. Athabasca Oil Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |