Correlation Between Logansport Financial and First Farmers
Can any of the company-specific risk be diversified away by investing in both Logansport Financial and First Farmers 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 Logansport Financial and First Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Logansport Financial Corp and First Farmers Financial, you can compare the effects of market volatilities on Logansport Financial and First Farmers 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 Logansport Financial with a short position of First Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logansport Financial and First Farmers.
Diversification Opportunities for Logansport Financial and First Farmers
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Logansport and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Logansport Financial Corp and First Farmers Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Farmers Financial and Logansport Financial 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 Logansport Financial Corp are associated (or correlated) with First Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Farmers Financial has no effect on the direction of Logansport Financial i.e., Logansport Financial and First Farmers go up and down completely randomly.
Pair Corralation between Logansport Financial and First Farmers
If you would invest 6,300 in First Farmers Financial on September 2, 2024 and sell it today you would earn a total of 399.00 from holding First Farmers Financial or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.36% |
| Values | Daily Returns |
Logansport Financial Corp vs. First Farmers Financial
Performance |
| Timeline |
| Logansport Financial Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Farmers Financial |
Logansport Financial and First Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Logansport Financial and First Farmers
The main advantage of trading using opposite Logansport Financial and First Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logansport Financial position performs unexpectedly, First Farmers 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 First Farmers will offset losses from the drop in First Farmers' long position.The idea behind Logansport Financial Corp and First Farmers Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First Farmers vs. Farmers Bancorp | First Farmers vs. Farmers Merchants Bancorp | First Farmers vs. Lakeland Financial | First Farmers vs. FFW Corporation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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