Correlation Between Farmers and Boswell J

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

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

Diversification Opportunities for Farmers and Boswell J

-0.79

Correlation Coefficient

Farmers  Boswell J

Pay attention - limited upside

The 3 months correlation between Farmers and Boswell is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Farmers And Merchants and Boswell J G in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boswell J G and Farmers 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 And Merchants are associated (or correlated) with Boswell J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boswell J G has no effect on the direction of Farmers i.e., Farmers and Boswell J go up and down completely randomly.

Pair Corralation between Farmers and Boswell J

Given the investment horizon of 90 days Farmers And Merchants is expected to generate 0.41 times more return on investment than Boswell J. However, Farmers And Merchants is 2.46 times less risky than Boswell J. It trades about 0.05 of its potential returns per unit of risk. Boswell J G is currently generating about -0.07 per unit of risk. If you would invest  567,245  in Farmers And Merchants on December 29, 2024 and sell it today you would earn a total of  7,755  from holding Farmers And Merchants or generate 1.37% return on investment over 90 days.

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

Farmers And Merchants  vs.  Boswell J G

Farmers And Merchants

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Farmers is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Boswell J G

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boswell J G has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Boswell J is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Farmers and Boswell J

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

The idea behind Farmers And Merchants and Boswell J G 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.