Correlation Between Farmers Bancorp and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Farmers Bancorp and Freedom 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 Farmers Bancorp and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers Bancorp and Freedom Bank of, you can compare the effects of market volatilities on Farmers Bancorp and Freedom 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 Farmers Bancorp with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Bancorp and Freedom Bank.
Diversification Opportunities for Farmers Bancorp and Freedom Bank
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Farmers and Freedom is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Bancorp and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Farmers Bancorp 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 Farmers Bancorp are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Farmers Bancorp i.e., Farmers Bancorp and Freedom Bank go up and down completely randomly.
Pair Corralation between Farmers Bancorp and Freedom Bank
Given the investment horizon of 90 days Farmers Bancorp is expected to generate 1.19 times more return on investment than Freedom Bank. However, Farmers Bancorp is 1.19 times more volatile than Freedom Bank of. It trades about 0.18 of its potential returns per unit of risk. Freedom Bank of is currently generating about -0.01 per unit of risk. If you would invest 3,313 in Farmers Bancorp on September 23, 2024 and sell it today you would earn a total of 535.00 from holding Farmers Bancorp or generate 16.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Farmers Bancorp vs. Freedom Bank of
Performance |
Timeline |
Farmers Bancorp |
Freedom Bank |
Farmers Bancorp and Freedom Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Farmers Bancorp and Freedom Bank
The main advantage of trading using opposite Farmers Bancorp and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Bancorp position performs unexpectedly, Freedom 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.Farmers Bancorp vs. Banco Bradesco SA | Farmers Bancorp vs. Itau Unibanco Banco | Farmers Bancorp vs. Lloyds Banking Group | Farmers Bancorp vs. Deutsche Bank AG |
Freedom Bank vs. PSB Holdings | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Farmers Bancorp | Freedom Bank vs. Alpine Banks of |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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