Correlation Between NYSE Composite and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Farmers Bank 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 NYSE Composite and Farmers Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and The Farmers Bank, you can compare the effects of market volatilities on NYSE Composite and Farmers Bank 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 NYSE Composite with a short position of Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Farmers Bank.
Diversification Opportunities for NYSE Composite and Farmers Bank
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between NYSE and Farmers is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank and NYSE Composite 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 NYSE Composite are associated (or correlated) with Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of NYSE Composite i.e., NYSE Composite and Farmers Bank go up and down completely randomly.
Pair Corralation between NYSE Composite and Farmers Bank
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.57 times more return on investment than Farmers Bank. However, NYSE Composite is 1.74 times less risky than Farmers Bank. It trades about 0.17 of its potential returns per unit of risk. The Farmers Bank is currently generating about 0.0 per unit of risk. If you would invest 1,482,589 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 529,756 from holding NYSE Composite or generate 35.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 79.7% |
| Values | Daily Returns |
NYSE Composite vs. The Farmers Bank
Performance |
| Timeline |
NYSE Composite and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
The Farmers Bank
Pair trading matchups for Farmers Bank
Pair Trading with NYSE Composite and Farmers Bank
The main advantage of trading using opposite NYSE Composite and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Farmers Bank 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 Bank will offset losses from the drop in Farmers Bank's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Farmers Bank vs. CIB Marine Bancshares | Farmers Bank vs. F M Bank | Farmers Bank vs. ENB Financial Corp | Farmers Bank vs. First Bankers Trustshares |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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