Correlation Between United Overseas and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both United Overseas 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 United Overseas and Farmers Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Overseas Bank and The Farmers Bank, you can compare the effects of market volatilities on United Overseas 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 United Overseas with a short position of Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Farmers Bank.
Diversification Opportunities for United Overseas and Farmers Bank
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Farmers is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank and United Overseas 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 United Overseas Bank 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 United Overseas i.e., United Overseas and Farmers Bank go up and down completely randomly.
Pair Corralation between United Overseas and Farmers Bank
Assuming the 90 days horizon United Overseas Bank is expected to generate 1.97 times more return on investment than Farmers Bank. However, United Overseas is 1.97 times more volatile than The Farmers Bank. It trades about 0.3 of its potential returns per unit of risk. The Farmers Bank is currently generating about -0.09 per unit of risk. If you would invest 4,862 in United Overseas Bank on September 1, 2024 and sell it today you would earn a total of 576.00 from holding United Overseas Bank or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Overseas Bank vs. The Farmers Bank
Performance |
| Timeline |
| United Overseas Bank |
| Farmers Bank |
United Overseas and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Farmers Bank
The main advantage of trading using opposite United Overseas and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas 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.| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
| Farmers Bank vs. Piraeus Bank SA | Farmers Bank vs. Turkiye Garanti Bankasi | Farmers Bank vs. Delhi Bank Corp | Farmers Bank vs. Uwharrie Capital Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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