Correlation Between Farmers Merchants and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Farmers Bancorp 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 Farmers Bancorp 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 Farmers Bancorp, you can compare the effects of market volatilities on Farmers Merchants and Farmers Bancorp 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 Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Farmers Bancorp.
Diversification Opportunities for Farmers Merchants and Farmers Bancorp
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Farmers and Farmers is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp 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 Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Farmers Bancorp go up and down completely randomly.
Pair Corralation between Farmers Merchants and Farmers Bancorp
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.65 times more return on investment than Farmers Bancorp. However, Farmers Merchants Bancorp is 1.53 times less risky than Farmers Bancorp. It trades about 0.03 of its potential returns per unit of risk. Farmers Bancorp is currently generating about -0.01 per unit of risk. If you would invest 95,424 in Farmers Merchants Bancorp on August 30, 2024 and sell it today you would earn a total of 14,026 from holding Farmers Merchants Bancorp or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.35% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Farmers Bancorp
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Farmers Bancorp |
Farmers Merchants and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Farmers Bancorp
The main advantage of trading using opposite Farmers Merchants and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Farmers Bancorp 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 Farmers Bancorp will offset losses from the drop in Farmers Bancorp's long position.| Farmers Merchants vs. Invesco High Income | Farmers Merchants vs. Blackrock Muniholdings Ny | Farmers Merchants vs. Nuveen California Select | Farmers Merchants vs. MFS Investment Grade |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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