Correlation Between Farmers Merchants and Yamaha
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Yamaha 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 Yamaha 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 Yamaha Motor Co, you can compare the effects of market volatilities on Farmers Merchants and Yamaha 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 Yamaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Yamaha.
Diversification Opportunities for Farmers Merchants and Yamaha
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmers and Yamaha is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Yamaha Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Motor 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 Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha Motor has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Yamaha go up and down completely randomly.
Pair Corralation between Farmers Merchants and Yamaha
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 1.47 times more return on investment than Yamaha. However, Farmers Merchants is 1.47 times more volatile than Yamaha Motor Co. It trades about 0.2 of its potential returns per unit of risk. Yamaha Motor Co is currently generating about -0.09 per unit of risk. If you would invest 96,600 in Farmers Merchants Bancorp on August 29, 2024 and sell it today you would earn a total of 12,850 from holding Farmers Merchants Bancorp or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Yamaha Motor Co
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Yamaha Motor |
Farmers Merchants and Yamaha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Yamaha
The main advantage of trading using opposite Farmers Merchants and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Yamaha 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 Yamaha will offset losses from the drop in Yamaha'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 |
| Yamaha vs. Isuzu Motors | Yamaha vs. Renault SA | Yamaha vs. Mazda Motor Corp | Yamaha vs. Bayerische Motoren Werke |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |