Correlation Between Taylor Calvin and Farmers Merchants
Can any of the company-specific risk be diversified away by investing in both Taylor Calvin and Farmers Merchants 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 Taylor Calvin and Farmers Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taylor Calvin B and Farmers Merchants Bancorp, you can compare the effects of market volatilities on Taylor Calvin and Farmers Merchants 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 Taylor Calvin with a short position of Farmers Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taylor Calvin and Farmers Merchants.
Diversification Opportunities for Taylor Calvin and Farmers Merchants
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taylor and Farmers is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Calvin B and Farmers Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Merchants Bancorp and Taylor Calvin 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 Taylor Calvin B are associated (or correlated) with Farmers Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Merchants Bancorp has no effect on the direction of Taylor Calvin i.e., Taylor Calvin and Farmers Merchants go up and down completely randomly.
Pair Corralation between Taylor Calvin and Farmers Merchants
Given the investment horizon of 90 days Taylor Calvin B is expected to generate 1.7 times more return on investment than Farmers Merchants. However, Taylor Calvin is 1.7 times more volatile than Farmers Merchants Bancorp. It trades about 0.04 of its potential returns per unit of risk. Farmers Merchants Bancorp is currently generating about 0.03 per unit of risk. If you would invest 3,724 in Taylor Calvin B on August 29, 2024 and sell it today you would earn a total of 907.00 from holding Taylor Calvin B or generate 24.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.86% |
| Values | Daily Returns |
Taylor Calvin B vs. Farmers Merchants Bancorp
Performance |
| Timeline |
| Taylor Calvin B |
| Farmers Merchants Bancorp |
Taylor Calvin and Farmers Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taylor Calvin and Farmers Merchants
The main advantage of trading using opposite Taylor Calvin and Farmers Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Calvin position performs unexpectedly, Farmers Merchants 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 Merchants will offset losses from the drop in Farmers Merchants' long position.| Taylor Calvin vs. Invesco High Income | Taylor Calvin vs. Blackrock Muniholdings Ny | Taylor Calvin vs. Nuveen California Select | Taylor Calvin vs. MFS Investment Grade |
| Farmers Merchants vs. Invesco High Income | Farmers Merchants vs. Blackrock Muniholdings Ny | Farmers Merchants vs. Nuveen California Select | Farmers Merchants vs. MFS Investment Grade |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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