Correlation Between Farmers Merchants and Surge Energy
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants and Surge 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 Surge 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 Surge Energy, you can compare the effects of market volatilities on Farmers Merchants and Surge 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 Surge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Surge Energy.
Diversification Opportunities for Farmers Merchants and Surge Energy
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farmers and Surge is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Surge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge 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 Surge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Energy has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Surge Energy go up and down completely randomly.
Pair Corralation between Farmers Merchants and Surge Energy
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.72 times more return on investment than Surge Energy. However, Farmers Merchants Bancorp is 1.39 times less risky than Surge Energy. It trades about 0.03 of its potential returns per unit of risk. Surge Energy is currently generating about -0.01 per unit of risk. If you would invest 98,900 in Farmers Merchants Bancorp on September 2, 2024 and sell it today you would earn a total of 10,550 from holding Farmers Merchants Bancorp or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.74% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Surge Energy
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Surge Energy |
Farmers Merchants and Surge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Surge Energy
The main advantage of trading using opposite Farmers Merchants and Surge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants position performs unexpectedly, Surge 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 Surge Energy will offset losses from the drop in Surge Energy's long position.| Farmers Merchants vs. HUMANA INC | Farmers Merchants vs. SCOR PK | Farmers Merchants vs. Aquagold International | Farmers Merchants vs. Thrivent High Yield |
| Surge Energy vs. Petro Viking Energy | Surge Energy vs. Parex Resources | Surge Energy vs. Razor Energy Corp | Surge Energy vs. Prospera 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 Stocks Directory module to find actively traded stocks across global markets.
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