Correlation Between Farmers Merchants and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Whitecap Resources 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 Whitecap Resources 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 Whitecap Resources, you can compare the effects of market volatilities on Farmers Merchants and Whitecap Resources 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 Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Whitecap Resources.
Diversification Opportunities for Farmers Merchants and Whitecap Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Farmers and Whitecap is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Whitecap Resources go up and down completely randomly.
Pair Corralation between Farmers Merchants and Whitecap Resources
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to under-perform the Whitecap Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Farmers Merchants Bancorp is 1.08 times less risky than Whitecap Resources. The otc stock trades about -0.04 of its potential returns per unit of risk. The Whitecap Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 677.00 in Whitecap Resources on November 28, 2024 and sell it today you would earn a total of 8.00 from holding Whitecap Resources or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Whitecap Resources
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Whitecap Resources |
Farmers Merchants and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Whitecap Resources
The main advantage of trading using opposite Farmers Merchants and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' 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 |
| Whitecap Resources vs. Athabasca Oil Corp | Whitecap Resources vs. Headwater Exploration | Whitecap Resources vs. Tamarack Valley Energy | Whitecap Resources vs. Birchcliff Energy |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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