Correlation Between Farmers Merchants and FFW
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and FFW 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 FFW 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 FFW Corporation, you can compare the effects of market volatilities on Farmers Merchants and FFW 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 FFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and FFW.
Diversification Opportunities for Farmers Merchants and FFW
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Farmers and FFW is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and FFW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFW Corporation 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 FFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFW Corporation has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and FFW go up and down completely randomly.
Pair Corralation between Farmers Merchants and FFW
Given the investment horizon of 90 days Farmers Merchants is expected to generate 1.05 times less return on investment than FFW. But when comparing it to its historical volatility, Farmers Merchants Bancorp is 2.16 times less risky than FFW. It trades about 0.03 of its potential returns per unit of risk. FFW Corporation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,197 in FFW Corporation on August 30, 2024 and sell it today you would lose (247.00) from holding FFW Corporation or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.21% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. FFW Corp.
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| FFW Corporation |
Farmers Merchants and FFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and FFW
The main advantage of trading using opposite Farmers Merchants and FFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, FFW 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 FFW will offset losses from the drop in FFW'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 |
| FFW vs. Invesco High Income | FFW vs. Blackrock Muniholdings Ny | FFW vs. Nuveen California Select | FFW vs. MFS Investment Grade |
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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