Correlation Between Credit Agricole and Farmers

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

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

Diversification Opportunities for Credit Agricole and Farmers

-0.83

Correlation Coefficient

Credit Agricole  Farmers

Pay attention - limited upside

The 3 months correlation between Credit and Farmers is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Credit 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 Credit 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 Credit 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 Credit Agricole i.e., Credit Agricole and Farmers go up and down completely randomly.

Pair Corralation between Credit Agricole and Farmers

Assuming the 90 days horizon Credit Agricole SA is expected to under-perform the Farmers. In addition to that, Credit Agricole is 1.99 times more volatile than Farmers And Merchants. It trades about -0.17 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	Significant
Accuracy	98.44%
Values	Daily Returns

Credit Agricole SA  vs.  Farmers And Merchants

Credit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Credit Agricole and Farmers

The main advantage of trading using opposite Credit Agricole and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit 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 Credit 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.