Correlation Between Farmers Merchants and Calbee
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Calbee 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 Calbee 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 Calbee Inc, you can compare the effects of market volatilities on Farmers Merchants and Calbee 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 Calbee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Calbee.
Diversification Opportunities for Farmers Merchants and Calbee
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farmers and Calbee is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc 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 Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Calbee go up and down completely randomly.
Pair Corralation between Farmers Merchants and Calbee
Given the investment horizon of 90 days Farmers Merchants is expected to generate 1.04 times less return on investment than Calbee. But when comparing it to its historical volatility, Farmers Merchants Bancorp is 1.83 times less risky than Calbee. It trades about 0.02 of its potential returns per unit of risk. Calbee Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 529.00 in Calbee Inc on August 26, 2024 and sell it today you would lose (36.00) from holding Calbee Inc or give up 6.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.57% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Calbee Inc
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Calbee Inc |
Farmers Merchants and Calbee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Calbee
The main advantage of trading using opposite Farmers Merchants and Calbee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Calbee 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 Calbee will offset losses from the drop in Calbee's long position.| Farmers Merchants vs. Invesco High Income | Farmers Merchants vs. Blackrock Muniholdings Ny | Farmers Merchants vs. MFS Investment Grade | Farmers Merchants vs. Federated Premier Municipal |
| Calbee vs. Artisan Consumer Goods | Calbee vs. Aryzta AG PK | Calbee vs. The A2 Milk | Calbee vs. BioAdaptives |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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