Correlation Between Farmers Merchants and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Haier Smart 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 Haier Smart 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 Haier Smart Home, you can compare the effects of market volatilities on Farmers Merchants and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Haier Smart.
Diversification Opportunities for Farmers Merchants and Haier Smart
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmers and Haier is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Haier Smart go up and down completely randomly.
Pair Corralation between Farmers Merchants and Haier Smart
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.64 times more return on investment than Haier Smart. However, Farmers Merchants Bancorp is 1.56 times less risky than Haier Smart. It trades about 0.0 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.04 per unit of risk. If you would invest 104,100 in Farmers Merchants Bancorp on November 4, 2024 and sell it today you would lose (100.00) from holding Farmers Merchants Bancorp or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Haier Smart Home
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Haier Smart Home |
Farmers Merchants and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Haier Smart
The main advantage of trading using opposite Farmers Merchants and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart'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 |
| Haier Smart vs. Whirlpool | Haier Smart vs. Ethan Allen Interiors | Haier Smart vs. Mohawk Industries | Haier Smart vs. Tempur Sealy International |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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