Correlation Between Pardee Resources and Farmers
Can any of the company-specific risk be diversified away by investing in both Pardee Resources and 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 Pardee Resources and Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pardee Resources Co and Farmers And Merchants, you can compare the effects of market volatilities on Pardee Resources and 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 Pardee Resources with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pardee Resources and Farmers.
Diversification Opportunities for Pardee Resources and Farmers
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pardee and Farmers is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pardee Resources Co and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and Pardee Resources 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 Pardee Resources Co are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Pardee Resources i.e., Pardee Resources and Farmers go up and down completely randomly.
Pair Corralation between Pardee Resources and Farmers
Given the investment horizon of 90 days Pardee Resources Co is expected to generate 1.62 times more return on investment than Farmers. However, Pardee Resources is 1.62 times more volatile than Farmers And Merchants. It trades about 0.02 of its potential returns per unit of risk. Farmers And Merchants is currently generating about -0.03 per unit of risk. If you would invest 26,900 in Pardee Resources Co on August 26, 2024 and sell it today you would earn a total of 3,900 from holding Pardee Resources Co or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.65% |
| Values | Daily Returns |
Pardee Resources Co vs. Farmers And Merchants
Performance |
| Timeline |
| Pardee Resources |
| Farmers And Merchants |
Pardee Resources and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pardee Resources and Farmers
The main advantage of trading using opposite Pardee Resources and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pardee Resources position performs unexpectedly, 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 Farmers will offset losses from the drop in Farmers' long position.| Pardee Resources vs. Expro Group Holdings | Pardee Resources vs. ChampionX | Pardee Resources vs. Ranger Energy Services | Pardee Resources vs. Cactus Inc |
| Farmers vs. Invesco High Income | Farmers vs. Blackrock Muniholdings Ny | Farmers vs. MFS Investment Grade | Farmers vs. Federated Premier Municipal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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