Correlation Between Yamaha and Farmers Merchants
Can any of the company-specific risk be diversified away by investing in both Yamaha 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 Yamaha and Farmers Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yamaha Motor Co and Farmers Merchants Bancorp, you can compare the effects of market volatilities on Yamaha 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 Yamaha with a short position of Farmers Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Farmers Merchants.
Diversification Opportunities for Yamaha and Farmers Merchants
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yamaha and Farmers is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha Motor Co 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 Yamaha 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 Yamaha Motor Co 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 Yamaha i.e., Yamaha and Farmers Merchants go up and down completely randomly.
Pair Corralation between Yamaha and Farmers Merchants
Assuming the 90 days horizon Yamaha Motor Co is expected to under-perform the Farmers Merchants. In addition to that, Yamaha is 2.21 times more volatile than Farmers Merchants Bancorp. It trades about -0.07 of its total potential returns per unit of risk. Farmers Merchants Bancorp is currently generating about -0.01 per unit of volatility. If you would invest 103,500 in Farmers Merchants Bancorp on November 27, 2024 and sell it today you would lose (500.00) from holding Farmers Merchants Bancorp or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yamaha Motor Co vs. Farmers Merchants Bancorp
Performance |
| Timeline |
| Yamaha Motor |
| Farmers Merchants Bancorp |
Yamaha and Farmers Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Farmers Merchants
The main advantage of trading using opposite Yamaha and Farmers Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha 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.| Yamaha vs. Isuzu Motors | Yamaha vs. Renault SA | Yamaha vs. Mazda Motor Corp | Yamaha vs. Bayerische Motoren Werke |
| Farmers Merchants vs. PSB Holdings | Farmers Merchants vs. Eagle Financial Services | Farmers Merchants vs. National Capital Bank | Farmers Merchants vs. Community Heritage Financial |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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