Correlation Between Farmers Bancorp and Pinetree Capital

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

By analyzing existing cross correlation between Farmers Bancorp and Pinetree Capital, you can compare the effects of market volatilities on Farmers Bancorp and Pinetree Capital 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 Pinetree Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Bancorp and Pinetree Capital.

Diversification Opportunities for Farmers Bancorp and Pinetree Capital

0.62

Correlation Coefficient

Farmers Bancorp  Pinetree Capital

Poor diversification

The 3 months correlation between Farmers and Pinetree is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Bancorp and Pinetree Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinetree Capital 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 Pinetree Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinetree Capital has no effect on the direction of Farmers Bancorp i.e., Farmers Bancorp and Pinetree Capital go up and down completely randomly.

Pair Corralation between Farmers Bancorp and Pinetree Capital

Given the investment horizon of 90 days Farmers Bancorp is expected to generate 54.71 times less return on investment than Pinetree Capital. But when comparing it to its historical volatility, Farmers Bancorp is 2.64 times less risky than Pinetree Capital. It trades about 0.01 of its potential returns per unit of risk. Pinetree Capital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  438.00  in Pinetree Capital on September 29, 2024 and sell it today you would earn a total of  325.00  from holding Pinetree Capital or generate 74.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Farmers Bancorp  vs.  Pinetree Capital

Farmers Bancorp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers Bancorp are ranked lower than 16 (%) 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.

Pinetree Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pinetree Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Pinetree Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farmers Bancorp and Pinetree Capital

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

The idea behind Farmers Bancorp and Pinetree Capital 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.