Correlation Between Farmers Merchants and Alpine Banks

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

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

Diversification Opportunities for Farmers Merchants and Alpine Banks

0.69

Correlation Coefficient

Farmers Merchants  Alpine Banks

Poor diversification

The 3 months correlation between Farmers and Alpine is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp and Alpine Banks of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Banks and Farmers Merchants 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 Merchants Bancorp are associated (or correlated) with Alpine Banks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Banks has no effect on the direction of Farmers Merchants i.e., Farmers Merchants and Alpine Banks go up and down completely randomly.

Pair Corralation between Farmers Merchants and Alpine Banks

Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to under-perform the Alpine Banks. In addition to that, Farmers Merchants is 2.08 times more volatile than Alpine Banks of. It trades about -0.12 of its total potential returns per unit of risk. Alpine Banks of is currently generating about -0.14 per unit of volatility. If you would invest  3,404  in Alpine Banks of on December 28, 2024 and sell it today you would lose (289.00) from holding Alpine Banks of or give up 8.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Farmers Merchants Bancorp  vs.  Alpine Banks of

Farmers Merchants Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farmers Merchants Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Alpine Banks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpine Banks of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Farmers Merchants and Alpine Banks

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

The idea behind Farmers Merchants Bancorp and Alpine Banks of 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..