Correlation Between Farmers Merchants and PetroShale
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and PetroShale 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 PetroShale 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 PetroShale, you can compare the effects of market volatilities on Farmers Merchants and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and PetroShale.
Diversification Opportunities for Farmers Merchants and PetroShale
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farmers and PetroShale is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale 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 PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and PetroShale go up and down completely randomly.
Pair Corralation between Farmers Merchants and PetroShale
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 1.93 times more return on investment than PetroShale. However, Farmers Merchants is 1.93 times more volatile than PetroShale. It trades about 0.14 of its potential returns per unit of risk. PetroShale is currently generating about -0.21 per unit of risk. If you would invest 96,707 in Farmers Merchants Bancorp on September 1, 2024 and sell it today you would earn a total of 7,893 from holding Farmers Merchants Bancorp or generate 8.16% 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. PetroShale
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| PetroShale |
Farmers Merchants and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and PetroShale
The main advantage of trading using opposite Farmers Merchants and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale'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 |
| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |