Correlation Between Twin Ridge and First Farmers
Can any of the company-specific risk be diversified away by investing in both Twin Ridge 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 Twin Ridge and First Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Twin Ridge Capital and First Farmers Financial, you can compare the effects of market volatilities on Twin Ridge 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 Twin Ridge with a short position of First Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twin Ridge and First Farmers.
Diversification Opportunities for Twin Ridge and First Farmers
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Twin and First is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Twin Ridge Capital 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 Twin Ridge 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 Twin Ridge Capital 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 Twin Ridge i.e., Twin Ridge and First Farmers go up and down completely randomly.
Pair Corralation between Twin Ridge and First Farmers
If you would invest 6,450 in First Farmers Financial on September 12, 2024 and sell it today you would earn a total of 207.00 from holding First Farmers Financial or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Twin Ridge Capital vs. First Farmers Financial
Performance |
| Timeline |
| Twin Ridge Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Farmers Financial |
Twin Ridge and First Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Twin Ridge and First Farmers
The main advantage of trading using opposite Twin Ridge and First Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twin Ridge 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 Twin Ridge Capital 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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