Correlation Between National Bank and Farmers National
Can any of the company-specific risk be diversified away by investing in both National Bank and Farmers National 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 National Bank and Farmers National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Farmers National Banc, you can compare the effects of market volatilities on National Bank and Farmers National 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 National Bank with a short position of Farmers National. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Farmers National.
Diversification Opportunities for National Bank and Farmers National
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Farmers is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Farmers National Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers National Banc and National Bank 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 National Bank Holdings are associated (or correlated) with Farmers National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers National Banc has no effect on the direction of National Bank i.e., National Bank and Farmers National go up and down completely randomly.
Pair Corralation between National Bank and Farmers National
Given the investment horizon of 90 days National Bank is expected to generate 1.82 times less return on investment than Farmers National. In addition to that, National Bank is 1.01 times more volatile than Farmers National Banc. It trades about 0.11 of its total potential returns per unit of risk. Farmers National Banc is currently generating about 0.2 per unit of volatility. If you would invest 1,376 in Farmers National Banc on September 1, 2024 and sell it today you would earn a total of 189.00 from holding Farmers National Banc or generate 13.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Farmers National Banc
Performance |
| Timeline |
| National Bank Holdings |
| Farmers National Banc |
National Bank and Farmers National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Farmers National
The main advantage of trading using opposite National Bank and Farmers National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Farmers National 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 Farmers National will offset losses from the drop in Farmers National's long position.| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
| Farmers National vs. Affinity Bancshares | Farmers National vs. Southern California Bancorp | Farmers National vs. Auburn National Bancorporation | Farmers National vs. BayCom Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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