Correlation Between Farmers National and Woodlands Financial

Can any of the company-specific risk be diversified away by investing in both Farmers National and Woodlands Financial 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 Woodlands Financial 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 Woodlands Financial Services, you can compare the effects of market volatilities on Farmers National and Woodlands Financial 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 Woodlands Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers National and Woodlands Financial.

Diversification Opportunities for Farmers National and Woodlands Financial

0.55

Correlation Coefficient

Farmers National  Woodlands Financial

Very weak diversification

The 3 months correlation between Farmers and Woodlands is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Farmers National Banc and Woodlands Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodlands Financial 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 Woodlands Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodlands Financial has no effect on the direction of Farmers National i.e., Farmers National and Woodlands Financial go up and down completely randomly.

Pair Corralation between Farmers National and Woodlands Financial

Given the investment horizon of 90 days Farmers National Banc is expected to under-perform the Woodlands Financial. But the stock apears to be less risky and, when comparing its historical volatility, Farmers National Banc is 1.66 times less risky than Woodlands Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Woodlands Financial Services is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,976  in Woodlands Financial Services on December 30, 2024 and sell it today you would earn a total of  274.00  from holding Woodlands Financial Services or generate 13.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.94%
Values	Daily Returns

Farmers National Banc  vs.  Woodlands Financial Services

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.

Woodlands Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woodlands Financial Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Woodlands Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farmers National and Woodlands Financial

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

The idea behind Farmers National Banc and Woodlands Financial Services 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..