Correlation Between First Financial and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both First Financial and Farmers Bancorp 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 First Financial and Farmers Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial and Farmers Bancorp, you can compare the effects of market volatilities on First Financial and Farmers Bancorp 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 First Financial with a short position of Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Farmers Bancorp.
Diversification Opportunities for First Financial and Farmers Bancorp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Farmers is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Financial and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp and First Financial 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 First Financial are associated (or correlated) with Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of First Financial i.e., First Financial and Farmers Bancorp go up and down completely randomly.
Pair Corralation between First Financial and Farmers Bancorp
Given the investment horizon of 90 days First Financial is expected to generate 1.52 times less return on investment than Farmers Bancorp. In addition to that, First Financial is 1.82 times more volatile than Farmers Bancorp. It trades about 0.07 of its total potential returns per unit of risk. Farmers Bancorp is currently generating about 0.19 per unit of volatility. If you would invest 3,293 in Farmers Bancorp on September 26, 2024 and sell it today you would earn a total of 555.00 from holding Farmers Bancorp or generate 16.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Financial vs. Farmers Bancorp
Performance |
Timeline |
First Financial |
Farmers Bancorp |
First Financial and Farmers Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Financial and Farmers Bancorp
The main advantage of trading using opposite First Financial and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Farmers Bancorp 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 Bancorp will offset losses from the drop in Farmers Bancorp's long position.First Financial vs. Chemung Financial Corp | First Financial vs. Citizens Northern Corp | First Financial vs. National Bankshares | First Financial vs. Fidelity DD Bancorp |
Farmers Bancorp vs. Banco Bradesco SA | Farmers Bancorp vs. Itau Unibanco Banco | Farmers Bancorp vs. Deutsche Bank AG | Farmers Bancorp vs. Banco Santander Brasil |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |