Correlation Between Crédit Agricole and Farmers

Can any of the company-specific risk be diversified away by investing in both Crédit Agricole and 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 Crédit Agricole and Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crdit Agricole SA and Farmers And Merchants, you can compare the effects of market volatilities on Crédit Agricole and 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 Crédit Agricole with a short position of Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crédit Agricole and Farmers.

Diversification Opportunities for Crédit Agricole and Farmers

-0.79

Correlation Coefficient

Crédit Agricole  Farmers

Pay attention - limited upside

The 3 months correlation between Crédit and Farmers is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Crdit Agricole SA and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and Crédit Agricole 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 Crdit Agricole SA are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Crédit Agricole i.e., Crédit Agricole and Farmers go up and down completely randomly.

Pair Corralation between Crédit Agricole and Farmers

Assuming the 90 days horizon Crdit Agricole SA is expected to under-perform the Farmers. In addition to that, Crédit Agricole is 2.87 times more volatile than Farmers And Merchants. It trades about -0.11 of its total potential returns per unit of risk. Farmers And Merchants is currently generating about 0.35 per unit of volatility. If you would invest  496,092  in Farmers And Merchants on September 4, 2024 and sell it today you would earn a total of  81,808  from holding Farmers And Merchants or generate 16.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Crdit Agricole SA  vs.  Farmers And Merchants

Crdit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Farmers And Merchants

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Farmers disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crédit Agricole and Farmers

The main advantage of trading using opposite Crédit Agricole and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crédit Agricole position performs unexpectedly, 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 Farmers will offset losses from the drop in Farmers' long position.

The idea behind Crdit Agricole SA and Farmers And Merchants 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.