Correlation Between Farmers National and Southern California
Can any of the company-specific risk be diversified away by investing in both Farmers National and Southern California 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 National and Southern California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers National Banc and Southern California Bancorp, you can compare the effects of market volatilities on Farmers National and Southern California 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 National with a short position of Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers National and Southern California.
Diversification Opportunities for Farmers National and Southern California
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Farmers and Southern is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Farmers National Banc and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California and Farmers National 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 National Banc are associated (or correlated) with Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of Farmers National i.e., Farmers National and Southern California go up and down completely randomly.
Pair Corralation between Farmers National and Southern California
Given the investment horizon of 90 days Farmers National Banc is expected to generate 0.88 times more return on investment than Southern California. However, Farmers National Banc is 1.13 times less risky than Southern California. It trades about 0.14 of its potential returns per unit of risk. Southern California Bancorp is currently generating about -0.06 per unit of risk. If you would invest 1,399 in Farmers National Banc on December 1, 2024 and sell it today you would earn a total of 50.00 from holding Farmers National Banc or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers National Banc vs. Southern California Bancorp
Performance |
| Timeline |
| Farmers National Banc |
| Southern California |
Farmers National and Southern California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers National and Southern California
The main advantage of trading using opposite Farmers National and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers National position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California's long position.| Farmers National vs. First Business Financial | Farmers National vs. Old Point Financial | Farmers National vs. Parke Bancorp | Farmers National vs. Independent Bank |
| Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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