Correlation Between Greenville Federal and Farmers Merchants

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

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

Diversification Opportunities for Greenville Federal and Farmers Merchants

-0.63

Correlation Coefficient

Greenville Federal  Farmers Merchants

Excellent diversification

The 3 months correlation between Greenville and Farmers is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Greenville Federal Financial and Farmers Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Merchants Bancorp and Greenville Federal 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 Greenville Federal Financial are associated (or correlated) with Farmers Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Merchants Bancorp has no effect on the direction of Greenville Federal i.e., Greenville Federal and Farmers Merchants go up and down completely randomly.

Pair Corralation between Greenville Federal and Farmers Merchants

Given the investment horizon of 90 days Greenville Federal Financial is expected to generate 1.07 times more return on investment than Farmers Merchants. However, Greenville Federal is 1.07 times more volatile than Farmers Merchants Bancorp. It trades about 0.08 of its potential returns per unit of risk. Farmers Merchants Bancorp is currently generating about -0.03 per unit of risk. If you would invest  700.00  in Greenville Federal Financial on October 22, 2024 and sell it today you would earn a total of  21.00  from holding Greenville Federal Financial or generate 3.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.0%
Values	Daily Returns

Greenville Federal Financial  vs.  Farmers Merchants Bancorp

Greenville Federal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Farmers Merchants Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers Merchants Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Farmers Merchants may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Greenville Federal and Farmers Merchants

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

The idea behind Greenville Federal Financial and Farmers Merchants Bancorp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.