Correlation Between Farmers Bancorp and National Australia
Can any of the company-specific risk be diversified away by investing in both Farmers Bancorp and National Australia 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 National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers Bancorp and National Australia Bank, you can compare the effects of market volatilities on Farmers Bancorp and National Australia 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 National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Bancorp and National Australia.
Diversification Opportunities for Farmers Bancorp and National Australia
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmers and National is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Bancorp and National Australia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Australia 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 National Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Australia Bank has no effect on the direction of Farmers Bancorp i.e., Farmers Bancorp and National Australia go up and down completely randomly.
Pair Corralation between Farmers Bancorp and National Australia
Given the investment horizon of 90 days Farmers Bancorp is expected to generate 1.21 times more return on investment than National Australia. However, Farmers Bancorp is 1.21 times more volatile than National Australia Bank. It trades about 0.25 of its potential returns per unit of risk. National Australia Bank is currently generating about -0.45 per unit of risk. If you would invest 3,550 in Farmers Bancorp on September 24, 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 | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Farmers Bancorp vs. National Australia Bank
Performance |
Timeline |
Farmers Bancorp |
National Australia Bank |
Farmers Bancorp and National Australia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Farmers Bancorp and National Australia
The main advantage of trading using opposite Farmers Bancorp and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Bancorp position performs unexpectedly, National Australia 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 National Australia will offset losses from the drop in National Australia's long position.Farmers Bancorp vs. First Farmers Financial | Farmers Bancorp vs. Farmers Merchants Bancorp | Farmers Bancorp vs. Lakeland Financial | Farmers Bancorp vs. Eagle Financial Services |
National Australia vs. Citizens Financial Corp | National Australia vs. Farmers Bancorp | National Australia vs. Alpine Banks of | National Australia vs. Taylor Calvin B |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |