Correlation Between S A P and Farmers Edge
Can any of the company-specific risk be diversified away by investing in both S A P and Farmers Edge 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 S A P and Farmers Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE ADR and Farmers Edge, you can compare the effects of market volatilities on S A P and Farmers Edge 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 S A P with a short position of Farmers Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Farmers Edge.
Diversification Opportunities for S A P and Farmers Edge
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between SAP and Farmers is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Farmers Edge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Edge and S A P 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 SAP SE ADR are associated (or correlated) with Farmers Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Edge has no effect on the direction of S A P i.e., S A P and Farmers Edge go up and down completely randomly.
Pair Corralation between S A P and Farmers Edge
If you would invest 21,649 in SAP SE ADR on November 2, 2024 and sell it today you would earn a total of 6,287 from holding SAP SE ADR or generate 29.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.97% |
| Values | Daily Returns |
SAP SE ADR vs. Farmers Edge
Performance |
| Timeline |
| SAP SE ADR |
| Farmers Edge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
S A P and Farmers Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Farmers Edge
The main advantage of trading using opposite S A P and Farmers Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Farmers Edge 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 Edge will offset losses from the drop in Farmers Edge's long position.| S A P vs. Tyler Technologies | S A P vs. Roper Technologies, | S A P vs. Cadence Design Systems | S A P vs. PTC Inc |
| Farmers Edge vs. RenoWorks Software | Farmers Edge vs. 01 Communique Laboratory | Farmers Edge vs. RESAAS Services | Farmers Edge vs. LifeSpeak |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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