Correlation Between Farmers Merchants and NuVista Energy
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and NuVista 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 NuVista 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 NuVista Energy, you can compare the effects of market volatilities on Farmers Merchants and NuVista 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 NuVista Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and NuVista Energy.
Diversification Opportunities for Farmers Merchants and NuVista Energy
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Farmers and NuVista is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and NuVista Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuVista 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 NuVista Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuVista Energy has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and NuVista Energy go up and down completely randomly.
Pair Corralation between Farmers Merchants and NuVista Energy
Given the investment horizon of 90 days Farmers Merchants is expected to generate 1.67 times less return on investment than NuVista Energy. In addition to that, Farmers Merchants is 1.08 times more volatile than NuVista Energy. It trades about 0.2 of its total potential returns per unit of risk. NuVista Energy is currently generating about 0.37 per unit of volatility. If you would invest 795.00 in NuVista Energy on August 29, 2024 and sell it today you would earn a total of 182.00 from holding NuVista Energy or generate 22.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. NuVista Energy
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| NuVista Energy |
Farmers Merchants and NuVista Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and NuVista Energy
The main advantage of trading using opposite Farmers Merchants and NuVista Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, NuVista 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 NuVista Energy will offset losses from the drop in NuVista Energy'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 |
| NuVista Energy vs. Yamaha Motor Co | NuVista Energy vs. Nitto Denko Corp | NuVista Energy vs. Farmers Merchants Bancorp | NuVista Energy vs. Furukawa Electric Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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