Correlation Between Kentucky First and Farmers

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

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

Diversification Opportunities for Kentucky First and Farmers

-0.56

Correlation Coefficient

Kentucky First  Farmers

Excellent diversification

The 3 months correlation between Kentucky and Farmers is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky First Federal and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and Kentucky First 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 Kentucky First Federal are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Kentucky First i.e., Kentucky First and Farmers go up and down completely randomly.

Pair Corralation between Kentucky First and Farmers

Given the investment horizon of 90 days Kentucky First Federal is expected to under-perform the Farmers. In addition to that, Kentucky First is 6.82 times more volatile than Farmers And Merchants. It trades about 0.0 of its total potential returns per unit of risk. Farmers And Merchants is currently generating about 0.03 per unit of volatility. If you would invest  567,245  in Farmers And Merchants on December 29, 2024 and sell it today you would earn a total of  4,755  from holding Farmers And Merchants or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Kentucky First Federal  vs.  Farmers And Merchants

Kentucky First Federal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kentucky First Federal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Kentucky First is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Farmers And Merchants

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 2 (%) 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.

Pair Trading with Kentucky First and Farmers

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

The idea behind Kentucky First Federal and Farmers And Merchants 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.