Correlation Between Fentura Financial and Prime Meridian

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

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

Diversification Opportunities for Fentura Financial and Prime Meridian

-0.13

Correlation Coefficient

Fentura Financial  Prime Meridian

Good diversification

The 3 months correlation between Fentura and Prime is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fentura Financial and Prime Meridian Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Meridian Holding and Fentura 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 Fentura Financial are associated (or correlated) with Prime Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Meridian Holding has no effect on the direction of Fentura Financial i.e., Fentura Financial and Prime Meridian go up and down completely randomly.

Pair Corralation between Fentura Financial and Prime Meridian

Given the investment horizon of 90 days Fentura Financial is expected to under-perform the Prime Meridian. But the otc stock apears to be less risky and, when comparing its historical volatility, Fentura Financial is 1.52 times less risky than Prime Meridian. The otc stock trades about -0.09 of its potential returns per unit of risk. The Prime Meridian Holding is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,099  in Prime Meridian Holding on December 26, 2024 and sell it today you would lose (200.00) from holding Prime Meridian Holding or give up 6.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

Fentura Financial  vs.  Prime Meridian Holding

Fentura Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fentura Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Prime Meridian Holding

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fentura Financial and Prime Meridian

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

The idea behind Fentura Financial and Prime Meridian Holding 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.