Correlation Between Farmers Merchants and NN Group
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and NN Group 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 NN Group 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 NN Group NV, you can compare the effects of market volatilities on Farmers Merchants and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and NN Group.
Diversification Opportunities for Farmers Merchants and NN Group
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Farmers and NNGRY is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV 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 NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and NN Group go up and down completely randomly.
Pair Corralation between Farmers Merchants and NN Group
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 2.64 times more return on investment than NN Group. However, Farmers Merchants is 2.64 times more volatile than NN Group NV. It trades about 0.21 of its potential returns per unit of risk. NN Group NV is currently generating about -0.37 per unit of risk. If you would invest 96,575 in Farmers Merchants Bancorp on September 4, 2024 and sell it today you would earn a total of 12,375 from holding Farmers Merchants Bancorp or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. NN Group NV
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| NN Group NV |
Farmers Merchants and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and NN Group
The main advantage of trading using opposite Farmers Merchants and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.| Farmers Merchants vs. Western Asset Global | Farmers Merchants vs. Invesco Trust For | Farmers Merchants vs. Logan Ridge Finance | Farmers Merchants vs. Invesco Advantage MIT |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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