Correlation Between Farmers Bancorp and Taylor Calvin

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

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

Diversification Opportunities for Farmers Bancorp and Taylor Calvin

-0.37

Correlation Coefficient

Farmers Bancorp  Taylor Calvin

Very good diversification

The 3 months correlation between Farmers and Taylor is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Bancorp and Taylor Calvin B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Calvin B 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 Taylor Calvin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Calvin B has no effect on the direction of Farmers Bancorp i.e., Farmers Bancorp and Taylor Calvin go up and down completely randomly.

Pair Corralation between Farmers Bancorp and Taylor Calvin

Given the investment horizon of 90 days Farmers Bancorp is expected to generate 0.96 times more return on investment than Taylor Calvin. However, Farmers Bancorp is 1.04 times less risky than Taylor Calvin. It trades about 0.25 of its potential returns per unit of risk. Taylor Calvin B is currently generating about -0.04 per unit of risk. If you would invest  3,278  in Farmers Bancorp on September 22, 2024 and sell it today you would earn a total of  570.00  from holding Farmers Bancorp or generate 17.39% return on investment over 90 days.

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

Farmers Bancorp  vs.  Taylor Calvin B

Farmers Bancorp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers Bancorp are ranked lower than 14 (%) 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.

Taylor Calvin B

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taylor Calvin B are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Farmers Bancorp and Taylor Calvin

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

The idea behind Farmers Bancorp and Taylor Calvin B 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.