Correlation Between CBOA Financial and Farmers Bank

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

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

Diversification Opportunities for CBOA Financial and Farmers Bank

0.0

Correlation Coefficient

CBOA Financial  Farmers Bank

Pay attention - limited upside

The 3 months correlation between CBOA and Farmers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CBOA Financial and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank and CBOA 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 CBOA Financial are associated (or correlated) with Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of CBOA Financial i.e., CBOA Financial and Farmers Bank go up and down completely randomly.

Pair Corralation between CBOA Financial and Farmers Bank

If you would invest  2,300  in The Farmers Bank on December 28, 2024 and sell it today you would earn a total of  25.00  from holding The Farmers Bank or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CBOA Financial  vs.  The Farmers Bank

CBOA Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBOA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CBOA Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Farmers Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Farmers Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Farmers Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CBOA Financial and Farmers Bank

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

The idea behind CBOA Financial and The Farmers Bank 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.