Correlation Between Farmers Merchants and Orogen Royalties
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Orogen Royalties 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 Orogen Royalties 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 Orogen Royalties, you can compare the effects of market volatilities on Farmers Merchants and Orogen Royalties 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 Orogen Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Orogen Royalties.
Diversification Opportunities for Farmers Merchants and Orogen Royalties
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farmers and Orogen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties 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 Orogen Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orogen Royalties has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Orogen Royalties go up and down completely randomly.
Pair Corralation between Farmers Merchants and Orogen Royalties
Given the investment horizon of 90 days Farmers Merchants is expected to generate 1.99 times less return on investment than Orogen Royalties. But when comparing it to its historical volatility, Farmers Merchants Bancorp is 2.33 times less risky than Orogen Royalties. It trades about 0.04 of its potential returns per unit of risk. Orogen Royalties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 96.00 in Orogen Royalties on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Orogen Royalties or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Orogen Royalties
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Orogen Royalties |
Farmers Merchants and Orogen Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Orogen Royalties
The main advantage of trading using opposite Farmers Merchants and Orogen Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Orogen Royalties 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 Orogen Royalties will offset losses from the drop in Orogen Royalties' 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 |
| Orogen Royalties vs. Precipitate Gold Corp | Orogen Royalties vs. Sailfish Royalty Corp | Orogen Royalties vs. Hummingbird Resources PLC | Orogen Royalties vs. Almadex Minerals |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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