Correlation Between Farmers Merchants and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Canacol Energy 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 Canacol Energy 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 Canacol Energy, you can compare the effects of market volatilities on Farmers Merchants and Canacol Energy 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 Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Canacol Energy.
Diversification Opportunities for Farmers Merchants and Canacol Energy
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Farmers and Canacol is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy 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 Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Canacol Energy go up and down completely randomly.
Pair Corralation between Farmers Merchants and Canacol Energy
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.48 times more return on investment than Canacol Energy. However, Farmers Merchants Bancorp is 2.1 times less risky than Canacol Energy. It trades about 0.01 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.05 per unit of risk. If you would invest 101,338 in Farmers Merchants Bancorp on November 27, 2024 and sell it today you would earn a total of 1,662 from holding Farmers Merchants Bancorp or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.66% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Canacol Energy
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Canacol Energy |
Farmers Merchants and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Canacol Energy
The main advantage of trading using opposite Farmers Merchants and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Canacol Energy 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 Canacol Energy will offset losses from the drop in Canacol Energy'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 |
| Canacol Energy vs. PetroShale | Canacol Energy vs. Inpex Corp ADR | Canacol Energy vs. Battalion Oil Corp | Canacol Energy vs. Condor Petroleum |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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