Correlation Between Taylor Calvin and Farmers Bancorp

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

By analyzing existing cross correlation between Taylor Calvin B and Farmers Bancorp, you can compare the effects of market volatilities on Taylor Calvin 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 Taylor Calvin with a short position of Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taylor Calvin and Farmers Bancorp.

Diversification Opportunities for Taylor Calvin and Farmers Bancorp

-0.34

Correlation Coefficient

Taylor Calvin  Farmers Bancorp

Very good diversification

The 3 months correlation between Taylor and Farmers is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Calvin B and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp and Taylor Calvin 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 Taylor Calvin B 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 Taylor Calvin i.e., Taylor Calvin and Farmers Bancorp go up and down completely randomly.

Pair Corralation between Taylor Calvin and Farmers Bancorp

Given the investment horizon of 90 days Taylor Calvin is expected to generate 2.3 times less return on investment than Farmers Bancorp. But when comparing it to its historical volatility, Taylor Calvin B is 2.58 times less risky than Farmers Bancorp. It trades about 0.27 of its potential returns per unit of risk. Farmers Bancorp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,550  in Farmers Bancorp on September 26, 2024 and sell it today you would earn a total of  298.00  from holding Farmers Bancorp or generate 8.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Taylor Calvin B  vs.  Farmers Bancorp

Taylor Calvin B

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Taylor Calvin B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Taylor Calvin is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Farmers Bancorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers Bancorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Farmers Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taylor Calvin and Farmers Bancorp

The main advantage of trading using opposite Taylor Calvin and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Calvin 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.

The idea behind Taylor Calvin B and Farmers Bancorp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.