Correlation Between Farmers National and Bank Utica

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

By analyzing existing cross correlation between Farmers National Banc and Bank Utica Ny, you can compare the effects of market volatilities on Farmers National and Bank Utica 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 National with a short position of Bank Utica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers National and Bank Utica.

Diversification Opportunities for Farmers National and Bank Utica

-0.22

Correlation Coefficient

Farmers National  Bank Utica

Very good diversification

The 3 months correlation between Farmers and Bank is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Farmers National Banc and Bank Utica Ny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Utica Ny and Farmers National 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 National Banc are associated (or correlated) with Bank Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Utica Ny has no effect on the direction of Farmers National i.e., Farmers National and Bank Utica go up and down completely randomly.

Pair Corralation between Farmers National and Bank Utica

Given the investment horizon of 90 days Farmers National Banc is expected to under-perform the Bank Utica. But the stock apears to be less risky and, when comparing its historical volatility, Farmers National Banc is 1.02 times less risky than Bank Utica. The stock trades about -0.06 of its potential returns per unit of risk. The Bank Utica Ny is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  49,050  in Bank Utica Ny on December 28, 2024 and sell it today you would lose (2,550) from holding Bank Utica Ny or give up 5.2% of portfolio value over 90 days.

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

Farmers National Banc  vs.  Bank Utica Ny

Farmers National Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farmers National Banc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Farmers National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bank Utica Ny

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Utica Ny has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bank Utica 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 National and Bank Utica

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

The idea behind Farmers National Banc and Bank Utica Ny 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 Transaction History module to view history of all your transactions and understand their impact on performance.